CADE signs agreement with iFood in case involving exclusivity deals in food delivery marketplaces

The Administrative Council for Economic Defense (CADE) entered into a Cease and Desist Agreement with the iFood application in a Tribunal hearing held this Wednesday, 8 February. The signing of the agreement happened in the context of an administrative enquiry into alleged antitrust violations in the national market of food delivery marketplaces.

According to the investigation, there is circumstantial evidence that iFood is abusing its dominant position by imposing exclusivity deals with restaurants listed on the platform and other practices with anti-competitive purposes. The violations raised entry barriers in the market and produced exclusionary effects.

To foster competition and the entry of other applications in this sector, the Cease and Desist Agreement signed with iFood includes provisions that impede or restrain exclusivity obligations in contracts signed between iFood and partner restaurants. CADE’s Cease and Desist Agreements are proven to be especially beneficial to dealing with unilateral conduct as they immediately halt the practice.

Details of the agreement

To address competition concerns raised by the practice, the Cease and Desist Agreement forbids exclusivity clauses—and contractual measures which could result in exclusivity—with restaurant chains of over 30 units. Since these brands work with an enormous number of orders, they are strategic to the portfolios of online food delivery marketplaces.

Additionally, the agreement sets ceilings at the local and national levels for chains with less than thirty restaurants. 

At the national level, the application’s volume of businesses bound by exclusivity deals cannot surpass 25% in gross merchandise value (GMV). At the local level, in municipalities of more than 500 thousand inhabitants, the number of exclusive restaurants cannot exceed 8% of the platform’s listed active establishments.

Moreover, iFood’s exclusive dealings with chains of less than 30 restaurants must last for a period no longer than two years and must be followed by an “exclusivity quarantine”. That is, the partner cannot sign a new exclusivity deal with iFood for an entire year from the end of the exclusivity contract.

This measure can be disregarded in up to 50% of the contracts with exclusivity provisions, contingent on a performance goal. Namely, while the exclusivity clause is in force, iFood’s investment in the partner’s business must increase the company’s revenue by a minimum of 40% above the growth of the food delivery market in the previous year.

Supplementary measures

Amongst other provisions, the Cease and Desist Agreement prohibits most favoured nation (MFN) clauses as to other marketplaces. Moreover, it precludes clauses that forbid partners from offering promotions in competing platforms or mentioning other food delivery services in advertisement actions entirely paid for by that service and conducted outside the iFood platform.

The agreement also prohibits iFood from executing contracts that impede restaurants from contracting with other platforms after the end of the exclusive dealing; from offering incentives or discounts to keep most of a partner’s delivery business bound to iFood; and from offering partners discounts based on volume increases, in an individualised manner.

The Cease and Desist Agreement runs for 54 months and establishes the figure of a monitoring trustee appointed by the signatories and confirmed by CADE. 

Access case no. 08700.004588/2020-47.