The tremendous growth of delivery platforms over the past few years, combined with major restructuring of market participants locally, led to an increasingly fierce battle among competitors in the Serbian food delivery market. In the EU competition arena, this market has been in the spotlight for years now. Withthe latest investigationof the German Delivery Hero and its Spanish subsidiary Glovo, the European Commission added to the long list of antitrust cases conducted in this field. In the aftermath of previous investigations, systemic measures have been taken, such as the adoption of new EU rules on digital platforms and consumer protection, as well as on gig workers’ rights.

Much the same, the Serbian Commission for the Protection of Competition (the “Commission“) has, as always, been hands-on when it comes to ever-changing markets such as the digital platform markets. That said, the Commission just completedan extensive market researchinto the delivery of food and other products via digital platforms in Serbia for years 2020/2021. The Commission, meticulous as always, examined the regulatory framework, market shares, contractual relations, commercial policies, as well as possible anti-competitive practices in the observed market. The study finally set the world alight on February 21, 2023, revealing some stirring findings in the food delivery world.

As the Commission well noted in its study, digital platform markets (food delivery included) are characterized by high barriers to entry which are caused by these markets’ inherent features: (i) economies of scale (high fixed and little or no variable costs of entry/operation); (ii) network effects (the extra value that every new user on a platform creates for other platform users), and (iii) control over data (easy accumulation of user data and their use for targeted marketing). These features influence how market participants behave and can, as the Commission rightfully pointed out, lead to higher market concentration and dominance.

The Commission has found that the Serbian food delivery market does not deviate much from the model – it has been highly concentrated throughout the covered period (even more towards the end of it), with three platforms standing out. Glovo, after acquiring the local platform Donesi, reached the shocking market share of over 60% in 2021.

The Commission further examined potential barriers to entry i.e., costs and other obstacles that prevent new competitors from entering the food delivery market. While the Commission found that there were no legal barriers to entry, it identified several economic barriers:

In addition, the Commission noted, as one of the most thought-provoking observations from the market participants, that some of the digital platforms had entered into exclusivity agreements with restaurants and stores, which prevented the latter from using other platforms’ services. The detailed analysis by the Commission of the agreements submitted as part of the study, revealed provisions that may result in: (i) exclusivity i.e., exclusion of other platforms from the market, (ii) exploitation i.e., imposition of discriminatory conditions upon restaurant partners, and (iii) limiting technical development.

In light of the above findings, in November 2022, the Commissioninitiated proceedings against Glovoalleging that the platform abused its dominant position by imposing exclusivity clauses on its restaurant partners. Still, let’s delay any judgement until the Commission reaches its own.

Finally, it is worth noting that the Commission went above and beyond and factored in non- competition-related concerns in its assessment of food delivery services. Several of these concerns have found their place in the study recommendations: (i) employment concerns – the Commission recommended to the Ministry of Labour to carry out a control into the implementation of Labour Law to digital platform employees and couriers. Here we remind you that Glovo in Spainhas been fined 79 million EURon account of 10,614 “false self-employed” workers; (ii) food delivery vs. postal services – the Commission found it essential to distinguish between food delivery services and postal services, and so it recommended to the Ministry of Trade to develop special regulations for digital platforms and establish a Register of digital platforms and a Register of suppliers of mainly restaurant food; (iii) food safety – the Commission suggested to the Ministry of Health to examine whether food delivery companies and entrepreneurs adhere to food safety regulations.

So, what are the hopes for new digital platforms entering the market? The race is certainly on ahead of time – the competition begins prior to even setting foot on the market, and indices of new regulatory tangles may further make the entry to this highly concentrated market a real herculean task.

We can all agree that this market research did reveal some gripping insights, but it is yet to be seen what the aftermath of the Commission’s fascinating discoveries will be. Stay tuned!