The Egyptian Competition Authority (ECA) has said that the return of European on-demand delivery service Glovo to the Egyptian market would be approved only after the company suspends an agreement with another delivery service in the country that violates anti-monopoly laws.
In an official statement on Tuesday, the ECA released the details about meetings held to discuss the Spanish on-demand service Glovo’s exit from the country, determining that the company and the German Delivery Hero—another delivery service company—had violated the country’s competition law through a shareholder agreement.
According to Article 6 of the 2005 law on the Protection of Competition and the Prohibition of Monopolistic Practices, agreements or contracts between competing persons in any relevant market are prohibited if they are intended to divide product markets or allocate them based on geographic areas, distribution centers, type of customers, goods, seasons or time periods.
The article also states that agreements are prohibited if the involved parties are found to have restricted the production, distribution or marketing operations, or limited the distribution of services in terms of its kind or volume or applying restrictions or conditions for their availability.
The announcement is the first by the Egyptian authorities following a shocking exit by Glovo last month; where they announced a suspension of services in the country without providing more details.
The exit comes less than a year after the emerging service launched in Egypt.
Delivery Hero operates in Egypt through two directly owned subsidiaries which are the closest competitors to Glovo in the Egyptian on-demand delivery market.
In 2018, Delivery Hero entered into a shareholder agreement with Glovo by acquiring 16 percent of Glovo’s shares.
The agreement confers Delivery Hero with certain corporate rights that allow the company to access commercially sensitive information of its competitors’ operations in the Egyptian market and to influence Glovo’s strategic business decisions, according to the statement.
“The exercise of minority rights in such a way as to limit competition between the parties is a recourse to methods that fall outside the scope of competition on the merits defined as the normal competition between firms in offering consumers better prices and/or quality,” the ECA argued.
The ECA has given both companies 30 days to execute the authority’s decisions.