Amazon gets thumbs up to buy stake in Deliveroo

The UK’s competition watchdog has cleared the way for Amazon to take a stake in food delivery company Deliveroo after finding it would not deal a major blow to competition in the sector.

The Competition and Markets Authority (CMA) said that it would allow the American online giant to push ahead with plans to buy 16% of the British business after a months-long investigation.

The announcement on Tuesday comes less than two months after the CMA signalled that it was planning to give Amazon the thumbs up for the deal.

Officials combed through more internal documents from both Amazon and Deliveroo and got input from a survey of more than 3,000 customers and replies from the industry.

They focused on whether its 16% in Deliveroo would discourage Amazon to compete independently with the British company in both restaurant delivery and grocery delivery.

At that level, the CMA said, the deal will not “substantially lessen competition in either market”.

But officials warned that any attempt by the technology company to buy more of Deliveroo could spark a second probe.

The CMA’s inquiry chair Stuart McIntosh said: “When looking at any merger, the CMA’s role is to assess whether consumers will lose out from a substantial lessening of competition.

“We have not found this to be the case given the scale of Amazon’s current investment, but if it were to increase its shareholding in Deliveroo, that could trigger a further investigation by the CMA.”

It marks the end of a rollercoaster investigation by the competition watchdog into the deal, which was first announced 15 months ago.

The CMA kicked off a so-called phase one investigation in December last year and later said there was a “realistic prospect” that the deal could stop Amazon once again trying to start a restaurant delivery business.

The online giant launched Amazon Restaurants in a bid to muscle into the space, but pulled the plug in the UK in December 2018.

But everything changed shortly after the CMA launched a phase two investigation, which looks into the case more in-depth.

With the onset of coronavirus, Deliveroo said it would collapse without the injection of cash from Amazon.

Based on this, the CMA said it would let the deal go ahead because competition would have taken a big blow if Deliveroo exited the market.

But only weeks later the CMA reversed that decision, saying Deliveroo was out of the woods after the food delivery market recovered better than expected.

Officials, therefore, went back to the drawing board to see if the deal would lessen competition.

It has now made its final decision.

Deliveroo said it was “delighted” by the CMA’s decision, and the fact the process had come to an end.

“This is fantastic news for UK customers and restaurants, and for the British economy,” the company said.

It added: “British-born Deliveroo will use the 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.

“Deliveroo is excited that Amazon, the most customer-obsessed and innovative company in the world, has shown such a huge vote of confidence in Deliveroo and chosen to invest in the company’s future.”

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