Amazon’s purchase of a stake in Deliveroo has been provisionally cleared by Britain’s competition regulator in light of a potentially fatal deterioration in the online food delivery group’s finances as a result of the coronavirus pandemic.
Amazon led a $575 million (£460 million) fundraising in Deliveroo in May, making what the two parties called “a minority investment” and pitching it against Uber Eats and Takeaway.com in the global race to dominate the market for takeaway meal deliveries.
The Competition and Markets Authority (CMA) said in December the deal raised “serious competition concerns” for consumers and shortly after launched a detailed probe.
https://www.asiantrader.biz/amazons-deliveroo-deal-raises-competition-concern-for-grocery-delivery-cma/
However, the CMA said on Friday it had become clear that the health emergency was having a significant negative impact on Deliveroo’s business, given the closure in the lockdown of a large number of the key restaurants available through the firm.
The regulator said it was informed by Deliveroo recently that the impact of the pandemic on its business meant that it would fail financially and exit the market without the Amazon investment.
“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,” Stuart McIntosh, chair of the CMA’s independent inquiry group, said.
He said Deliveroo’s demise could leave some customers cut off from online food delivery and 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,” he said.
Deliveroo said it was delighted with the CMA’s decision.
“This investment will help us to overcome immediate and long-term challenges,” a spokeswoman said.
“We’re committed to this investment,” Amazon said in a statement. “Our investment will benefit both consumers of Deliveroo’s service and its small-business restaurant partners.”
Meanwhile, Deliveroo is strengthening its presence in the convenience market in response to the COVID-19 crisis.
The company has signed partnership deals with PayPoint, McColls’ and M&S for delivery of grocery products since the lockdown came into effect. It has an existing partnership with Co-op.
The CMA is seeking views on its provisional findings by May 11. The deadline for its final report is June 11.
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