Table of Contents
- First EC Fines Imposed for Labour Market and Minority Shareholder Infringements
- UK CMA Starts Market Study Into Railway and Road Infrastructure
- French Competition Authority Issues Decision on Labour Market Restrictions
- UK High Court Considers Supplier Actions to Restrict Retailers From Selling a Competitor’s Product
First EC Fines Imposed for Labour Market and Minority Shareholder Infringements
On 2 June 2025, the European Commission (EC) announced fines on Delivery Hero and Glovo for infringing EU competition law. This is the first decision in which the EC imposed a fine for an agreement concerning employees and its first fine for anticompetitive use of a minority shareholding in a competing business.
Delivery Hero and Glovo were competitors in the EU in online food delivery. They deliver food, grocery and other retail products to customers ordering from an app or website.
In July 2018, Delivery Hero acquired a minority, noncontrolling stake in Glovo based on a shareholders’ agreement. Delivery Hero progressively increased this stake through subsequent investments. In July 2022, Delivery Hero acquired sole control of Glovo, at which point the companies formed one economic group and were therefore no longer competitors. The EC found that, from July 2018 to July 2022, Delivery Hero and Glovo progressively increased anticompetitive coordination between them.
In the original shareholders’ agreement, the companies agreed to limited reciprocal no-hire clauses for key employees. This was expanded to a general agreement not to actively approach each other’s employees. They also exchangedcommercially sensitive information (CSI), including on commercial strategies, prices, capacity, costs and product characteristics, which enabled them to align and influence their respective market conduct. They further agreed to divide between themselves the national markets for online food delivery in the EU.
According to the EC, all of these practices were “facilitated” by Delivery Hero’s minority shareholding in Glovo. The stake “enabled anti-competitive contacts between the two rival companies at several levels [and] allowed Delivery Hero to obtain access to [CSI] and to influence decision-making processes in Glovo, and ultimately to align the two companies’ respective business strategies.”
A minority shareholding in a competitor is not illegal under EU competition law, and the investor can receive suitable information about the investee company so it can monitor its investment. However, the case demonstrates clearly the risks of minority investments and other structural links that involve competitors when they are not set up properly.
The negotiation process should involve clean teams. Ideally in the shareholders’ agreement, the companies should suitably control board membership and information flow, including provisions for individuals to leave meetings and not receive certain information, and establish related behavioural safeguards and firewalls. Relevant individuals should also receive special compliance training, understanding that in some countries in the EU, including the UK, individuals can face personal criminal penalties for cartel-type activity.
The EC signalled that it will monitor whether minority shareholdings are used as a channel for the exchange of CSI in other sectors. The EC also considers that competition for labour is an integral part of the competitive process, and no-poach restrictions concerning employees can only be justified in limited circumstances. The case is a useful compliance example on these issues for companies in any sector.
UK CMA Starts Market Study Into Railway and Road Infrastructure
The UK Competition and Markets Authority (CMA) launched a new market study into the design, planning and delivery of road and railway infrastructure across the UK. The study will look at the full project life cycle from pre-project identification needs and funding to the procurement, planning, construction, enhancement and maintenance phases. The study should be of interest to civil engineering contracting firms, civil engineering consultants and others involved in this sector in the UK at all levels of the supply chain.
This is the first market study the CMA launched since the publication of the UK’s new strategic steer for the CMA, which set out how the government expects the CMA to support and contribute to the government’s (supposed) priority of economic growth. The troubled High Speed Two rail line will not be covered, but notably, the study started the day after the government announced another delay to the project.
The CMA likely launched the market study because it considers that competition in the market may not be functioning properly. The CMA stated it will focus on “persistent issues around costs and delivery of road and railway infrastructure across the country.” The CMA cannot impose remedies following a market study, but the final report is likely to include recommendations to government, such as changes to laws covering procurement, planning or other regulatory processes.
Interested organisations can get involved, initially on the purpose and proposed scope of the market study, by responding to the questions in the statement of scope. The deadline is 17 July 2025.
French Competition Authority Issues Decision on Labour Market Restrictions
On 11 June 2025, the French competition authority (Autorité de la concurrence) issued a decision fining four companies for infringing competition law by entering into no-poach agreements concerning employees. The decision also considered nonsolicitation clauses in partnership contracts but took no action. The Autorité stated that the decision “is the first of its kind in Europe.”
The decision concerns four competitors in the engineering, technology consulting and IT services sectors who entered into two separate general and stand-alone no-poach “gentlemen’s agreements” with no time limit or limitation of scope. The agreements prohibited the companies from poaching (direct solicitation) and hiring (following a spontaneous application) and included an agreement to consult the other when moves were planned. The Autorité considered these agreements to be equivalent to purchasing cartels and therefore restrictions of competition law “by object,” or automatic.
The Autorité also reviewed written nonsolicitation clauses included in broader agreements, including partnership contracts between the companies, such as consortium, co-contracting and subcontracting. Taking into account the content of these clauses, including the limitation to a specific category of employee or a specific project and limited duration, the Autorité decided these were not restrictions by object. It also took the view that they did not infringe competition law by virtue of their anticompetitive effects.
The full decision is not yet available, but it appears the Autorité took this approach without considering whether the clauses could be treated as ancillary to a wider neutral or procompetitive agreement (a partnership contract) and therefore outside competition law (even if anticompetitive). It is likely the EC and national regulators in the EU and UK would analyse such restrictions using that “ancillary restraints” principle.
The Autorité indicated that two principles guided its analysis of the case: Formal, specific clauses are better than a broad, imprecise no-poach agreement, and clauses with limited scope and duration are better than general, open-ended agreements.
That is not a surprising analysis because there is usually no justification for bald no-poach agreements of the type set out in the gentlemen’s agreements. The case shows once again that such collusion is considered a serious competition law infringement, and EU and UK regulators will enforce against it. When announcing the decision, the Autorité expressly called on companies to review their practices and indicated labour market restrictions are a key concern for EU competition regulators.
Labour restrictions specifically included in wider agreements, such as the partnership contracts, by contrast can be justified if they are relevant to the agreement, or may not be considered restrictive at all. The Autorité’s analysis of the nonsolicitation clauses is of general interest for companies and advisers (and compliance training) because it shows this principle operating in practice, even if the ancillary restraints doctrine may instead be applied in other cases.
UK High Court Considers Supplier Actions to Restrict Retailers From Selling a Competitor’s Product
On 16 June 2025, the England and Wales (UK) High Court ruled on a stand-alone claim by Cabo Concepts, a toy start-up company, against MGA Entertainment, a leading toy manufacturer. Cabo alleged that MGA stifled Cabo’s launch of a new collectible toy range, Worldeez, which led to Cabo’s failure as a business.
Cabo argued that MGA’s conduct amounted to an abuse of a dominant position and the implementation of anti-competitive agreements, both contrary to EU and/or UK competition law. It also alleged that MGA made unjustified threats of patent infringement proceedings within the meaning of the UK Patents Act 1977.
The court agreed that MGA had a dominant position in the UK in the wholesale supply of small plastic collectible dolls with its LOL Surprise product, and it “very clearly” abused that dominant position through an exclusionary campaign to prevent leading UK toy retailers from selling Worldeez products. This conclusion was based on MGA’s threats to withdraw supply of LOL Surprise to existing customers, accompanied and reinforced by threats of litigation and disparaging claims that Worldeez was a “knock off” of LOL Surprise.
The court further found that MGA entered into agreements with leading UK toy retailers requiring that they not stock the Worldeez products. These agreements were “by object” restrictions of competition law because the “transparent purpose” was to exclude Worldeez from the market. The agreements “completely [excluded]” the Worldeez globe, “the anchor product of the range,” from the main distribution channels in the UK.
However, the court had to consider the potential application of the vertical agreements block exemption regulation (VBER), which automatically exempts qualifying distribution and supply agreements from the application of competition law. Amongst other criteria, consideration of the VBER requires the supplier’s (MGA’s) market share not to exceed 30% during the period of the agreement. Although the court found MGA’s share to be dominant at a later date (partly on the basis of a high market share), its share during the relevant period was less than
30%.
On that basis, the application of the VBER turned on whether the agreement by a retailer not to stock Worldeez was an indefinite noncompete obligation within the meaning of the block exemption. If that was the case, it would be excluded from the exemption. The court found the restrictions were not noncompetes because they did not require the toy retailers not to stock competing brands in general and also did not require the retailers to take more than 80% of their stock of LOL Surprise and substitutable products from MGA. They only prohibited the retailers from stocking Worldeez. The VBER therefore did apply to the agreements.
In relation to the final argument made by Cabo, the court agreed that various emails and phone calls from MGA to retailers amounted to illegal unjustified threats of patent infringement proceedings. MGA had no intention of pursuing these claims and could not pursue them because the patent had not yet been issued.
Cabo therefore established two infringements of the law, abuse of dominance and unjustified threats of patent infringement, and sought damages. Damages could only be awarded if MGA’s actions had caused loss on a balance of probabilities and should be measured against the counterfactual, a scenario in which MGA did not engage in the conduct.
The court ruled that, if loss can be established, that loss was the result of those two breaches of the law and therefore the requirement of causation was established. The damages claim was based on various heads of loss, and they all required that Cabo would have traded profitably but for MGA’s conduct (the counterfactual).
The court reviewed in detail the evidence before it on the counterfactual issue. It considered Worldeez’ quality as a product, the strength of Cabo’s marketing campaign, the extent of retailer support for Worldeez, Cabo’s financial projections and operational abilities, the working capital available to Cabo, toy expert evidence on Cabo’s likely commercial success, and the analysis of sales it required to break even.
Based on those factors, it decided that Cabo would not have traded profitably in the counterfactual case. The claim for damages failed, and Cabo’s success in identifying an abuse of dominance and unjustified threats of patent infringement was a pyrrhic victory, not least because it will likely have to pay at least some of MGA’s legal costs as well as its own.
The case could potentially be read as making it less risky for an established dominant company to prevent a nascent unprofitable rival from entering the market. Even if a company is found to have infringed the law, the competitor may be judged unlikely to succeed, so there are no losses or damages for the dominant company to pay.
Notably, apart from the substantive decision, the judge was critical of the economic evidence submitted to the court. This is an ongoing issue in courts in England and Wales arising from the position that in theory economists and other experts presenting to the court should be independent, while they are in practice paid by one side.
The court noted that “significant shifts in position by an expert during the course of a trial may well lead the court to scrutinise the objectivity and independence of that expert’s initial opinion.” Further, when “an expert completely abandons a particular part of their evidence, not as a result of any new evidence available at the trial, but rather because it is plain that the original position was untenable from the outset, that may suggest that the expert’s initial position was unduly influenced by a desire to advance their client’s case, rather than representing evidence which was the independent product of the expert, uninfluenced by the pressures of litigation, as required by [procedural rules].”
Along similar lines, the court noted that “expert evidence at a trial is not and cannot be seen as a negotiation process, where the experts start from extremely polarised and partisan positions, only to edge incrementally towards the centre ground as the trial progresses.” Instead, “[t]he proper course is for each opposing expert to start from a position that is objective and defensible [and following interim procedural steps] any residual differences can then properly be tested through the experts’ oral evidence at the trial.”
This is a useful reminder of how to run the expert process in competition law and other claims in the UK. The parties need to be careful when instructing experts, who should avoid taking a partisan stance. Their reports need to be fully independent, irrespective of links to a party. When there is a risk of bias or a conflict of interest, there is a risk of a claim being struck out, leading to costs implications and damage to the client’s case.
Additional EU and UK competition law news coverage can be found on McGuireWoods’ Insights page. McGuireWoods also publishes legal alerts on U.S. antitrust developments and numerous other topics.