Probe is launched into Amazon’s investment in Deliveroo over fears it could lead to customers facing higher prices for food delivery
- CMA launched probe after Amazon failed address ‘concerns’ about investment
- Competition and Markets Authority has investigated £450 million bid since May
- Deliveroo said it has been and will continue to ‘work closely’ with the authority
The competition watchdog has launched an in-depth investigation into Amazon’s £450million bid to buy a stake in Deliveroo.
The Competition and Markets Authority (CMA) said it has launched a thorough probe after Amazon failed to address ‘initial concerns that their investment in Deliveroo could be bad for customers, restaurants and grocers’.
On December 11, the regulator called on Amazon and Deliveroo to offer undertakings to address its concerns that any deal between the companies may weaken competition.
It threatened to launch the in-depth review, which could take up to six months, if the companies failed to address these concerns.
An in-depth investigation has been launched by the competition watchdog into Amazon’s £450 million bid to buy a stake in Deliveroo (stock image)
In its decision, the CMA said the two parties failed to offer any undertakings to them by the December 18 deadline.
The CMA has been investigating the deal, which saw Amazon lead a £450 million investment deal in the takeaway courier, since it was announced in May.
Due to the companies’ sizes, the CMA launched an initial inquiry, then a phase one study.
In terms of reference accompanying the phase two announcement, the CMA said it believes the move could result in a ‘substantial lessening of competition’ in the fast-growing online food delivery market.
The CMA previously raised concerns that the deal could discourage Amazon from re-entering the restaurant food delivery sector, having previously launched and closed its Amazon Restaurants business a year ago.
A spokeswoman for Deliveroo said: ‘Deliveroo has been working closely with the CMA and will continue to do so.
‘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.
The CMA has been investigating the deal, which saw Amazon lead a £450 million investment deal in the takeaway courier, since it was announced in May (stock image)
‘Deliveroo is a British company operating right across the country and this investment will be particularly beneficial to the UK economy.’
An Amazon spokesman said: ‘A homegrown UK business like Deliveroo should have broad access to investors and supporters.
‘Amazon believes that this investment funding will lead to more pro-consumer innovation by helping Deliveroo continue to build its world-class service and remain competitive in the restaurant food delivery space by creating more highly-skilled jobs, innovating in the restaurant food delivery sector, and developing new products for customers.’
Amazon failed to get its own restaurant delivery business going in the United Kingdom, shutting it down for good late last year. It faced tough competition from Deliveroo, as well as its other rivals in the UK, such as Just Eat and UberEats.
Amazon’s service, called Amazon Restaurants, still operates in several US cities.
Deliveroo, founded in 2013, has about 60,000 riders delivering food from some 80,000 restaurants in 14 countries, including Australia, Italy, France, Singapore, Kuwait and Spain.