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Technology

UK Watchdog Affirms Provisional Blessing For Amazon's Deliveroo Deal

Britain's competition regulator has affirmed its provisional clearance of Amazon's purchase of a 16% stake in online delivery group Deliveroo but changed the basis of its approval, having reviewed submissions from interested parties, including rivals.

Having provisionally approved the deal in April on the basis that Deliveroo could go out of business without the Amazon investment, it said that its approval was now purely on competition grounds.

The Competition and Markets Authority's (CMA) original clearance and methodology was criticised in submissions by companies including Just Eat Takeaway and Dominos Pizza.

Amazon led a $575 million fundraising in Deliveroo in May last year making what the two parties called 'a minority investment' and pitching it against Uber Eats and Just Eat Takeaway.com in the global race to dominate the market for meal deliveries.

Having launched an investigation into the deal in December, the CMA said in April it had become clear that the coronavirus crisis was damaging Deliveroo's revenues, given the closure of a large number of the restaurants available through its platform during the lockdown.

Considerable Recent Improvement

On Wednesday, the CMA said Deliveroo’s finances had shown considerable recent improvement and it no longer believed it would exit the market without the Amazon deal.

"Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers," said inquiry chair Stuart McIntosh.

The CMA, however, warned that were Amazon to gain greater control over Deliveroo, in particular by making a full acquisition, a further investigation could follow.

It said it would now seek views on its latest findings by 10 July with a final ruling by 6 August.

A spokeswoman for Deliveroo welcomed the decision, while a spokeswoman for Amazon said it was committed to the investment.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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