UK watchdog throws down gauntlet over Amazon deal

THE competition watchdog has fired a warning shot towards Silicon Valley with an investigation into Amazon’s investment in Deliveroo.

This multi-million-pound deal, part of a £460m fundraising round, was announced in May and will see the internet giant handed a minority stake in the British food delivery business.

But the Competition and Markets Authority (CMA) has ordered them to temporarily halt the process amid suggestions it could eventually lead to a full takeover of Deliveroo.

The move will be seen as a sign the regulator is toughening up its approach to investments by US tech giants in UK start-ups.

Critics claim a failure to block Amazon, Facebook and Google from gobbling up smaller rivals has stifled competition.

In its announcement yesterday, the CMA said there were reasons to believe Amazon’s investment in Deliveroo may eventually lead to the firm ceasing to be distinct.

The regulator said it would probe the deal and could launch a full-blown merger inquiry if it believes that competition could be damaged.

Nicole Kar, a competition expert at law firm Linklaters, said: ‘This type of deal is right in the CMA’s area of interest – socalled “killer acquisitions”.

‘You might not think there is much competition between Deliveroo and Amazon, 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 in their life.’

A Deliveroo spokesman said: ‘There are a number of major companies within the food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition.’

Amazon said: ‘We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service.’