Prosus asks EU to drop Delivery Hero stake sale rule

Prosus NV has asked European Union antitrust officials to drop a required sale of its Delivery Hero SE stake, Bloomberg reported, putting Brussels’s merger-remedy playbook back under scrutiny after a deal has already been cleared.

At issue is a condition attached to Prosus’s €4.1 billion ($4.78 billion) purchase of Just Eat Takeaway. The remedy required the Dutch technology investor to cut a 27.4 per cent holding in Delivery Hero to below 10 per cent within 12 months, a sale intended to reduce links among large food-delivery platforms in Europe.

For Brussels, the filing turns on the mechanics of the earlier approval. Prosus is asking regulators to reconsider the condition after Delivery Hero’s shareholder base shifted and pressure around European delivery deals kept building. Approval would show that remedies can be revisited when a buyer argues that the competitive facts have changed. Refusal would underline that terms accepted at clearance can remain binding even when valuations and shareholder registers move.

Before clearance, Prosus had already offered to cut the stake. Reuters reported in July that the company proposed bringing its Delivery Hero holding below 10 per cent to answer competition concerns during the first phase of the review.

“We have submitted remedies that directly and comprehensively address the concerns expressed in their preliminary assessment, with a view to obtaining a Phase 1 approval.”

Prosus, according to Reuters

Conditional approval followed, Reuters reported in August. Teresa Ribera, the EU antitrust chief, cast the decision as part of a push to police a delivery industry that had already drawn competition scrutiny.

“This decision also sends a clear warning to an industry with recent antitrust issues: we won’t tolerate any anti-competitive behaviour that may harm consumers.”

Teresa Ribera, EU antitrust chief, according to Reuters

The remedy question

Regulators must decide whether Prosus can keep economic exposure to Delivery Hero while controlling Just Eat Takeaway, two businesses in the same online food-ordering market. The harder procedural question is what evidence a company needs before the EU reopens a remedy that helped secure approval.

Because merger remedies are meant to give regulators certainty before control changes hands, requests to alter them are uncommon. Brussels can amend or waive conditions. The risk is that buyers may accept strict terms to close a transaction and seek relief only after the strategic asset is secured. Other dealmakers with divestment, fire-wall or minority-stake conditions are likely to watch the Prosus filing for that reason.

Meanwhile, Delivery Hero’s shareholder base has also changed. Reuters reported this month that Uber Technologies had increased its stake in the German company and become its biggest shareholder. That gives Prosus another fact to cite as it argues the competitive landscape has moved since the remedy was negotiated, though it does not answer the EU’s concern about overlapping influence.

Platform enforcement is already tougher than it was when many delivery groups were expanding. EU regulators fined Delivery Hero and Glovo €329 million in June over antitrust breaches, a penalty cited in the same Reuters account of the conditional approval. Prosus now has to weigh the cost of selling down a strategic stake against the risk of asking Brussels to revisit a condition it presented as a consumer-protection safeguard.

Maintaining the sale would keep the Just Eat remedy intact and force Prosus toward the below-10 per cent threshold. A waiver would give the company a cleaner capital-markets position, but it would also raise new questions about how flexible Europe’s merger rulebook should be after a buyer has already won approval.