Watchdog warns Amazon's Deliveroo investment raises 'serious concerns'

Amazon's stake in Deliveroo is being investigated by the CMA

Amazon's stake in Deliveroo is being investigated by the CMA

The Competitions and Markets Authority said that its initial investigations found that Amazon's involvement as a lead investor in a £452 million funding round in Deliveroo raised "serious competition concerns for United Kingdom customers" - and said it may hold a full-scale probe.

The move comes after Amazon announced a "substantial investment" in Deliveroo earlier this year as part of a £450m fund-raising push by the UK-based firm to finance its expansion plans as it battled rivals, including Uber Eats and Just Eat.

British regulators said Wednesday they would take a close look at Amazon's investment in food delivery startup Deliveroo to determine whether it could harm competition in the food delivery sector - both takeout and fresh groceries.

Andrea Gomes da Silva, head of the Competition and Markets Authority, said: "Millions of people in the United Kingdom use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries".

"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", Andrea Domes da Silva, executive director of the CMA, said in a statement.

If it instead partnered with Deliveroo through the investment the CMA expressed concerns competition could be damaged in an emerging market. The CMA also found internal Amazon documents suggesting the tech giant was seriously considering re-entering the market.The CMA is anxious the combined strength of Amazon and Deliveroo would prevent smaller companies entering the market.

"A homegrown United Kingdom business like Deliveroo should have broad access to investors and supporters", an Amazon spokesperson told the Times. Having started in London, it now operates in 500 towns and cities across 13 markets worldwide, including Australia, Belgium, France, Hong Kong, Italy, Ireland, the Netherlands, Singapore, Spain and the United Arab Emirates. Amazon previously offered a similar service, Amazon Restaurants UK, in competition with Deliveroo until 2018, when it exited the market.

An Amazon spokesperson said: "A homegrown United Kingdom business like Deliveroo should have broad access to investors and supporters".

"Amazon believes that this investment funding will lead to more pro-consumer innovation", it added.

The CMA has given the two companies five working days to present their proposals.

In June, the CMA served an initial enforcement order (IEO) on Amazon and Deliveroo, signalling possible concerns about the transaction.

The CMA then launched a formal "Phase 1" merger inquiry in October.

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