The Competition and Markets Authority (CMA) has given Amazon the green light to invest in London-based Deliveroo after initially citing competition concerns.
The review comes after the e-commerce giant announced intentions to purchase a 16 per cent stake in the food delivery business.
But an initial ‘Phase 1’ investigation in December last year shed doubt on the deal, with the CMA concluding that there was a “realistic prospect” that the transaction could harm competition “by discouraging Amazon from re-entering the online restaurant food market or further developing its presence in the online convenience grocery delivery market in the UK”.
The ‘Phase 2’ investigation also threw up obstacles after the CMA stood its ground and determined “on the balance of probabilities, a transaction would lead to a substantial lessening of competition”.
However, the “extensive analysis of internal documents from Amazon and Deliveroo, a survey of more than 3,000 consumers, and extensive submissions from interested third parties” has shifted the CMA’s decision in favour of the deal.
“The CMA ultimately found that this level of investment will not substantially lessen competition in either market,” it said in its final decision.
“However, if Amazon were to acquire a greater level of control over Deliveroo – through, for example, acquiring a controlling interest in the company – this could trigger a further investigation by the CMA.”
Commenting on the deal, Inquiry Chair Stuart McIntosh added: “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.”
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