The UK’s competition authority will investigate Amazon’s investment in Deliveroo

The UK’s competition authority will investigate Amazon’s investment in Deliveroo
Finance

Amazon’s move to invest in the London-based food delivery platform Deliveroo will be investigated by the UK’s Competition and Markets Authority (CMA), the agency announced Friday, according to The Guardian.

The CMA raised concerns earlier this month that Amazon’s £442 million investment would lead to higher prices and reduced quality of services for consumers, restaurants, and grocers. They offered the two firms a chance to make proposals that would address those concerns, to avoid an extensive probe that could interfere with the investment. 

On Friday, after the companies had declined to do so, the CMA said it was referring the issue for a full investigation. The regulator could ultimately block the investment entirely, or call for specific conditions under which it could move forward. The investigation could take up to six months—the CMA has said it will conclude by June. 

Amazon was the lead investor in a £442 million funding round, earning the US tech giant a 16 percent stake in Deliveroo. The London company has been raising funds to help it compete with formidable rivals such as Uber Eats. 

In 2016, Amazon launched the short-lived Amazon Restaurants, available for some Prime subscribers in London, but ended the service late last year. 

One key concern voiced by the CMA relates to the move’s impact on the UK’s emerging ultra-fast grocery delivery market. Both Deliveroo and Amazon have been working separately with UK grocers to deliver groceries in as little as 30 minutes. In a small but growing sector, already with relatively few competing firms, the CMA has warned that the move could harm competition at a pivotal time in the sector’s development.

The CMA is expected to publish an ‘issues statement,’ outlining the specific concerns it plans to investigate. The two companies are expected to argue that Amazon could still re-enter the market for food delivery in the UK to compete with Deliveroo, and emphasize the differences in the two companies’ business models. 

“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,” a Deliveroo spokesperson said in a statement. 

“Deliveroo is a British company operating right across the country and this investment will be particularly beneficial to the UK economy.”

Photo by Sam Saunders [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]

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