Decision in Foodora case: exclusivity agreements with restaurants not allowed

The Norwegian Competition Authority is closing its investigation of Foodora as the company has agreed not to use exclusivity agreements or exclusive practices towards restaurants regarding the use of Foodora’s food ordering platform. Other food ordering platforms can thereby access the market more easily.  

The Authority has investigated Foodora since February 2021. The Authority suspected that Foodora was dominant and had included exclusivity clauses in its agreements with restaurants. Such requirements may constitute an infringement of the prohibition in the Competition Act against abuses of a dominant position. Exclusivity agreements between dominant companies and their customers are agreements that oblige customers to buy all or most of their requirements from the dominant company.

-The Authority’s decision ensures that restaurants, which have concluded an agreement with Foodora, are free to choose whether also to cooperate with other food ordering platforms. This may improve the conditions of competition and lead to a better offer for consumers who buy food from restaurants via food ordering platforms, says Director Hanne Dahl Amundsen.  

Dominant companies have a special responsibility
Dominant companies have a special responsibility under the Competition Act. They may compete on the merits, but the use of exclusivity obligations in agreements with their customers may exclude smaller competitors from the market or reduce their possibilities to compete. Such restrictions of competition may lead to higher prices, less choice and lower quality of products and services to the detriment of consumers.  

-Exclusive agreements concluded between dominant companies and their customers may restrict competition and is therefore a matter of concern for the Authority, says Dahl Amundsen. 

Digital platform market
Foodora operates a digital platform that restaurants can use to sell prepared meals to end-users. 

-Digital platform markets are often characterised by rapid growth, network effects and economies of scale. In such markets, challengers must gain a certain size in order to compete efficiently against established companies. The larger the established companies are, the harder it is for smaller companies to enter the market. By adopting a commitment decision in this case, we have managed to resolve the identified competition concerns rapidly, which is of particular importance in this type of markets, says Dahl Amundsen. 

Restaurants can cooperate with several food ordering platforms
Foodora has not agreed that there are competition concerns in this case. It has nevertheless committed not to use exclusivity clauses in its agreement with restaurants. Thereby, restaurants having an agreement with Foodora can also cooperate with other food ordering platforms. Foodora has also agreed to refrain from using exclusionary practices towards restaurants, including any form of incentives or pressure to obtain exclusivity. This means that Foodora, for example, cannot request higher prices from restaurants that decide to cooperate with other platform companies as well.  

The commitments have a duration of three years from the adoption of the Authority’s decision. 

Foodora changed the standard terms in its agreements with restaurants prior to the adoption of the Authority’s decision on 18 January 2022. The decision made Foodora’s commitments legally binding. 

A trustee will ensure that Foodora complies with the commitments. If Foodora should not act in accordance with the commitments submitted, the Authority may reopen the investigation and could impose a fine for non-compliance under the Competition Act. 

About the investigation  

  • The investigation was initiated in February 2021. 
  • The Competition Authority has gathered a substantial amount of information from Foodora and other market players by way of information requests. 
  • Foodora has submitted the proposed commitments to address the competition concerns identified by the Competition Authority. 
  • The investigation was closed in January 2022. 

About the commitments 

  • Companies that are under investigation can submit proposal of commitments anytime during the investigation. 
  • The commitments can entail changes in a company’s market behaviour or changes to its structure. 
  • The proposed commitments must be suited to address the competition concerns identified. 
  • A company that proposes commitments does not admit that is has infringed the Competition Act.  
  • If the Competition Authority decides to make commitments binding, it will not adopt a position on whether or not the Competition Act has been infringed. 
  • A commitment decision obliges the company concerned to implement the commitments. 
Hanne Dahl Amundsen, avdelingsdirektør i Konkurransetilsynet.

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