Amazon’s Deliveroo deal could face CMA probe

The Competition and Markets Authority has put the brakes on the deal and said it “has reasonable grounds for suspecting” that the planned cash injection will “result in Amazon and Deliveroo ceasing to be distinct”.

The CMA has issued an initial enforcement order, which pauses the deal while it decides whether or not to launch a full investigation.

The two companies revealed in May that Amazon had become the biggest investor in Deliveroo’s latest fundraising round.

Deliveroo raised a total of $575m (£450m), although it did not disclose how much Amazon would be ploughing into the fast-growing business.

It said it planned to use the cash to fund international expansion, improve its service and to grow its delivery-only kitchens division.

Deliveroo founder and chief executive Will Shu said at the time: “This new investment will 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, and to create more flexible, well-paid work for riders.

“Amazon has been an inspiration to me personally and to the company, and we look forward to working with such a customer-obsessed organisation.”

The deal would bring together two of the biggest perceived threats in the grocery sector and help Amazon fight back against the rise of food delivery companies, such as Just Eat and Uber Eats.

Sainsbury’s has previously said that the growth of such firms, which act as intermediaries between restaurants and customers, was impacting grocery spending.

Sales at Deliveroo alone more than doubled to £277m in 2017, its last reported year.

The UK foodservice delivery market as a whole was worth £8.1bn in 2018, up 13.4% year on year, according to insight agency MCA.