Just Eat's purchase of rival Hungryhouse is facing an in-depth investigation by the Competition and Markets Authority (CMA) unless it can address competition concerns, the watchdog announced today.
Just Eat paid £200m for Hungryhouse last December, buying from Delivery Hero.
The competition watchdog has concluded an initial investigation into the merger, and today said it is "concerned that the loss of competition resulting from the Just Eat/Hungryhouse merger may result in worse terms for restaurants using either of the two companies".
The regulator will now refer the deal for an in-depth phase 2 investigation by an independent group of CMA panel members, "unless Just Eat is able to offer undertakings which sufficiently address the CMA’s competition concerns", the group said.
The online takeaway company has until 17 May to offer these undertakings. If it doesn't come up with any proposals, the second stage of the investigation will go ahead.
Business as usual
Just Eat, which recently started using robots to deliver takeaways, said it "looks forward to cooperating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction". In the meantime, the company said, it will continue to operate its business as usual.
Shares in Just Eat dipped by one per cent at the market open.
|What are the CMA's concerns?|
|The watchdog found that Just Eat and Hungryhouse are close competitors because of the similarity of their service and their broad geographical coverage.
The CMA said it believes more recent entrants to this market offering delivery services - such as Deliveroo, UberEATS and Amazon Restaurants - represent less direct competition to the companies as these tend to target different types of restaurant (primarily dine-in restaurants without their own delivery services). These recent entrants also offer less extensive geographic coverage than Just Eat and Hungryhouse.