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Amazon's investment in Deliveroo cleared provisionally

17 April 2020 by
Amazon's investment in Deliveroo cleared provisionally

Amazon's $575m (£423m) investment in Deliveroo has been provisionally cleared by the Competition and Markets Authority (CMA) after the coronavirus lockdown left the delivery company financially unstable.

The CMA had said it would investigate following the announcement that Amazon planned to acquire a minority stake in the delivery business in May 2019.

News of the investment followed the closure of Amazon's own food delivery arm, Amazon Restaurants UK, in December 2018.

The CMA had wanted to examine if Amazon would have been likely to re-enter the restaurant delivery market independently and if its decision to instead merge with Deliveroo was likely to cause a substantial loss of competition.

However the negative impact of the coronavirus pandemic on Deliveroo has prompted the CMA to give the deal the green light, after the delivery company said it would fail financially without the investment.

The watchdog has said the claim was backed up by evidence provided by the company's financial advisors.

Stuart McIntosh, chair of the CMA's independent inquiry group, said: "These wholly unprecedented circumstances have meant reassessing the focus of this investigation, reacting quickly to the impact of the coronavirus and deciding what it would mean for the businesses involved in this transaction and, in turn, for customers.

"Without additional investment, which we currently think is only realistically available from Amazon, it's clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market. This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality. Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon's investment in Deliveroo.

"The CMA is now asking for views on these provisional findings by 17:00 Monday 11 May 2020 and will assess all evidence provided before making a final decision. The statutory deadline for the CMA's final report is 11 June 2020."

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