Amazon and Deliveroo deal under investigation by competition regulator

Date : 05 July 2019

The Competition and Markets Authority (CMA) has said it will look into the details of Amazon’s significant investment in food courier service Deliveroo.

$575m funding round

In May, Amazon became the biggest investor in a $575m investment round in Deliveroo, with the exact amount Amazon spent unknown. Deliveroo said the new investment will contribute to expanding its London based engineering team, reaching new customers through international expansion of its delivery reach, and new innovations in the food sector.

Today, the CMA has issued an enforcement order against the companies while it considers whether a full merger inquire is required. No deadline has been set as to whether the CMA will launch a full inquiry, but any deal between Amazon and Deliveroo has been paused for now. Meanwhile, the enforcement order sets out how both companies must interact during this period.

In the document, the CMA states that is has “Reasonable grounds for suspecting that it is or may be the case that Amazon.com, Inc (Amazon) and Roofoods Ltd, trading as Deliveroo (Deliveroo), have ceased to be distinct; and/or that arrangements are in progress or in contemplation which, if carried into effect, will result in Amazon and Deliveroo ceasing to be distinct”.

If the CMA decides any deal between the two companies could create an unfair advantage and reduce choice for consumers, it has the power to block this deal.

Deliveroo operates in over 500 towns and cities across 14 markets, including Australia, Belgium, France, Germany, Hong Kong, Italy, Ireland, Kuwait, Netherlands, Singapore, Spain, Taiwan, United Arab Emirates and the UK. Many of which, are where Amazon has a Global Marketplace. In the UK, the company delivers throughout 100 towns and cities, partnering with over 8,000 restaurants to deliver food to customers ordered on the website or Deliveroo app.

A spokesperson for Deliveroo commented:

"Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals. There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition. This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers”.

 

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