Amazon cleared to take 16% stake in Deliveroo

Posted on August 5, 2020 by Alistair Hardaker

Deliveroo

Deliveroo

The Competition and Markets Authority (CMA) has cleared a 16% purchase of UK food delivery firm Deliveroo.

The CMA said the decision was made after it found the deal will not “substantially lessen competition” in the sector.

But the CMA has warned that if Amazon were to acquire a greater level of control over Deliveroo, for instance by acquiring a controlling interest in the company,  this could trigger further investigation.

The final decision of the 15-month investigation follows the CMA’s analysis of internal documents from Amazon and Deliveroo, a survey of more than 3,000 consumers, and submissions from interested third parties.

Deliveroo originally argued that the the coronavirus pandemic would cause the firm to financially fail and exit the market without Amazon’s investment.

The regulator had originally concluded that this outcome would be worse for consumers than the deal, but changed approach to focus on competition after a better-than-expected recovery and criticism from rivals including recently merged rival Just Eat Takeaway and Domino’s Pizza, which offers its own delivery service.

A Deliveroo spokesperson said the British firm would use the new investment to “increase choice and value for customers, support for restaurants and will be able to offer more riders the flexible work they value as the company expands.”

They called the decision “fantastic news for UK customers and restaurants, and for the British economy.”

Stuart McIntosh, Inquiry Chair, said the CMA “… has concluded that the transaction will not result in a substantial lessening of competition in either restaurant delivery or convenience grocery delivery. Our decision reflects the scale of Amazon’s investment in Deliveroo (16% of the company’s equity) and its incentives to compete in both markets.”

In January, Deliveroo announced it would bring 70 jobs to its Edinburgh base, its first outside London following the acquisition of Edinburgh-based software design and development firm Cultivate.

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