Amazon has been given five days to respond to the Competition and Market Authority’s (CMA) concerns over its investment in Deliveroo.
The government body has said that if the two companies fail to alleviate concerns over a dilution of competition in the market, which could ultimately stop prices from falling, it would launch an in-depth investigation.
Amazon announced its plan to acquire a minority stake in Deliveroo as part of a $575m (£423m) deal in May.
News of the investment followed the closure of Amazon's own food delivery arm, Amazon Restaurants UK. The concept was wound up in December 2018, two years on from its launch.
In its initial investigation the CMA found evidence Amazon had looked to re-enter the sector independently, which it felt would “significantly increase competition in online food delivery”.
If it instead partnered with Deliveroo through the investment the CMA expressed concerns competition could be damaged in an emerging market.
Andrea Gomes da Silva, CMA executive director, said: “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 which could otherwise exist between Amazon and Deliveroo would be reduced.”