Amazon-Deliveroo: CMA set to ratchet up probe into minority stake

The authority has said in its initial slide rule over Amazon buying a minority stake in Deliveroo that it could harm competition in two ways, which means it will likely launch an in-depth investigation into the deal.

Amazon snapped up a stake in food delivery platform in the business’s latest funding round in May, which Deliveroo founder and chief executive Will Shu said would “help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses”.

However, the CMA has cast aspersions on the investment. The authority said the deal could “damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK”.

“Although Amazon closed its Amazon Restaurants business, the CMA believes evidence uncovered in Amazon’s internal business documents shows a strong, continued interest in this sector and a material likelihood that Amazon would look to re-enter,” the CMA added.

The CMA also warned that Amazon’s Deliveroo investment could “damage competition in the emerging market for online convenience grocery delivery, where the two companies have already established market-leading positions”.

The CMA has given the companies five working days to offer “legally binding proposals” to address its concerns. The CMA will either accept these findings, if they are provided by Amazon and Deliveroo, or launch an in-depth investigation.

CMA executive director Andrea Gomes da Silva said: “Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries.

“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.

“If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop. This is because the significant competition that could otherwise exist between Amazon and Deliveroo would be reduced.”

A Deliveroo spokeswoman 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.

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