Amazon finally wins approval from regulator to control minority stake in Deliveroo

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On Tuesday, it received approval from the UK-based watchdog to take a stake in UK-based food delivery platform Deliveroo.
The decision by the Competition and Markets Authority (CMA) concludes a 15-month investigation into Amazon’s investment in Deliveroo, which came as part of a $ 575 million fundraising that saw others investing in 2019.

Read: Amazon ends its own restaurant-delivery service as Grubh and Uber Eats competition intensifies
The investigation focused on whether Amazon’s 16% delivery share would harm competition, and whether it would reduce its chances of entering the market as a competitor.

“[Amazon’s] The position as a strategic investor is likely to increase weight Amazon’s views will go ahead with Delivero’s management and other investors and, in turn, enhance its ability to influence Delivero’s commercial strategy, ”it said in submission to the CMA .
It reviewed submissions from competitors including Just Eat Takeaway, TKYY.
Which argues that the investment will reduce Amazon’s chances of entering the UK fast food delivery market and will be able to influence Deliveroo’s strategy in a way that harms competition.
In a December note, investment bank Jefferies said the investigation had “interfered with ‘not on my watch'” in 2019, attributing the case to negative political sentiment towards large US Internet companies.
But, CMA Executive Director, Andrea Gomes da Silva said at the time: “If the deal was to proceed in its current form, then there is a real risk that it would face higher prices and lower quality services to customers, restaurants and grocers May be needed. Markets develop. ”
“This is because significant competition that may exist between Amazon and Deliveroo will be reduced,” he said.
During the case, the CMA also considered whether Deliveroo Kovid-19 without investment would collapse under financial stress because of Kovid-19, temporarily approving the investment in April.
It continued the investigation and temporarily approved the investment again in June, after Deliveroo’s “considerable improvement” in its financial position.
It added that the investment should go ahead as it would not harm competition in restaurant delivery or convenience grocery delivery, although it continued to ask for ideas and assess the evidence on provisional findings.
But Tuesday’s decision now formally clears the way for Amazon and the investment will move forward.
Read: Amazon targets Uber Eats with large Deliveroo investment
Stuart McIntosh, who is presiding over the inquiry, said further investigations could begin if Amazon sought to increase control of Deliveroo.


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