Amazon’s Deliveroo deal cleared by watchdog

Matthew Field

A MULTIMILLION-POUND investment by US tech titan Amazon in Deliveroo has been provisionally cleared by competition chiefs after the takeaway courier said it would collapse if the deal continued to be blocked.

The $575m (£460m) cash injection was approved by the Competition and Markets Authority (CMA) as Deliveroo’s business ramps up to keep restaurants operating during lockdown.

It means Amazon will take a minority stake in the company – giving the US tech titan yet another role in British life.

The CMA said: “In recent weeks, it has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo’s business.

“Deliveroo recently informed the CMA that the impact of the coronavirus pandemic on its business meant that it would fail financially and exit the market without the Amazon investment.”

Regulators had been formally investigating the tie-up over concerns it was anti-competitive.

The CMA had argued that Amazon’s minority investment in Deliveroo could be considered a merger. This might harm competition by preventing rivals from taking the company on – pushing up costs for customers.

At the time, the watchdog argued that the two firms could gain power over the growing market for grocery deliveries, an area that has yet to take off in the UK, but is expected to eventually be worth millions of pounds a year.

Deliveroo and Amazon had claimed the investment would not harm but strengthen market competition by giving a key player the power to serve more consumers.

The CMA eventually ruled Amazon might still re-enter the market regardless of its holding in Deliveroo.

A Deliveroo spokesman said: “This investment will help us to overcome immediate and long-term challenges, allow us to continue to improve our service for customers, enable us to develop new innovations and offer people even greater choice.”