Amazon’s move for slice of Deliveroo faces deeper watchdog inquiry
THE competition watchdog has launched an in-depth investigation into Amazon’s investment in Deliveroo after the two companies decided against offering concessions to get the controversial fundraising over the line.
The Competition and Markets Authority had raised concerns over Deliveroo’s $575m (£440m) funding round led by Amazon earlier this month, saying a tie-up between the pair could potentially limit competition in the online food delivery and grocery market.
Andrea Gomes da Silva, executive director for the CMA, previously said: “If the deal were to proceed in its current form, there’s a risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop.”
The watchdog had given the pair five days to come up with a solution to its concerns, but in that time, no remedies were offered by the companies. The deal will undergo an investigation by CMA panel members, expected to take as long as six months, to assess whether the investment would create a “relevant merger situation” and if that situation would limit competition.
It will mean the investment will have been put on hold for more than a year: Deliveroo announced the $575m round in May and was ordered to pause it in July. Although Amazon would only be taking a minority stake in Deliveroo through the investment, the CMA will be analysing whether such a deal could see Amazon exert material influence over the takeaway company, eventually meaning they would “cease to be distinct”.
Amazon abandoned takeaway delivery in the UK last year, but the initial inquiry had suggested the company had been looking to re-enter the market. Both companies are also making moves into grocery delivery, Amazon through its Pantry and Amazon Fresh services, and Deliveroo through a pilot scheme with the Co-op.
The CMA had said Deliveroo and Amazon were “two of the strongest players in this market” and that competition between them could increase “as the market develops”. An investigation is likely to hear evidence from across the grocery and takeaway industries, and could ultimately block the deal.
A spokesman for Deliveroo said the company had “been working closely with the CMA and will continue to do so”. And he added: “We are confident that we will persuade the CMA of the facts that this minority investment will add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers.”
A spokesman for Amazon said the investment would “lead to more proconsumer innovation by helping Deliveroo continue to build its world-class service and remain competitive in restaurant food delivery”.