UK watchdog eyes Amazon stake in food service
LONDON — The U.K. competition watchdog launched an investigation Friday into Amazon’s purchase of a large stake in food-delivery service Deliveroo, a move that suggests authorities are taking a harder line on the expansion of Big Tech.
Though the deal had not been billed as a takeover by Amazon, the Competition and Markets Authority said it has “reasonable grounds for suspecting” that the agreement could “result in Amazon and Deliveroo ceasing to be distinct.”
The investigation will put on hold any plans to merge Amazon operations with Deliveroo, whose delivery bikes and scooters are ubiquitous in many major cities. Besides Britain, it also operates in several countries in Europe and Asia, including Germany, France, Italy and Australia.
The investigation comes as the regulator is taking a more activist role in seeking to protect consumers in an evolving marketplace.
“This type of deal is right in the CMA’S area of interest at the moment— large tech incumbents like Amazon investing in smaller rivals — so called ‘killer acquisitions,’” said Nicole Kar, head of the London Competition Practice at law firm Linklaters.
“You might not think there is much competition between Deliveroo and Amazon right at present, given Deliveroo is very focused on food delivery, but that’s too simplistic. Amazon wants to get any product to the customer fast and to ‘own’ the customer for everything they possibly want to buy in their life and every way they want it delivered.”
American authorities are likewise taking steps to rein in the growing power of large tech firms. The U.S. Justice Department and the Federal Trade Commission are moving to investigate Google, Facebook, Amazon and Apple over their aggressive business practices. The House Judiciary Committee has announced an antitrust probe, promising “a top-tobottom review of the market power held by giant tech platforms.”
In the U.K., observers have noted a change of direction at the CMA since Chairman Andrew Tyrie took over last year. Tyrie has promised to play a crucial role in Britain’s global competitiveness.
But even so, the decisions this week marked a change of tone, if not direction.
“The CMA’S move comes as a surprise and suggests that the new regime is much more interventionalist than in the past,” said Clive Black, the head of research at financial firm Shore Capital. “As well as the focus upon an investment as opposed to a total takeover, this move by the regulator may also spell a change of view around megatech and their expansion in the U.K.”