Wednesday 24 June 2020 3:28 pm

CMA clears Amazon's £442m Deliveroo stake despite delivery firm's coronavirus turnaround

Britain’s competition watchdog has provisionally cleared Amazon’s £442m investment in Deliveroo, saying that it is “not likely to result in a substantial lessening of competition”.

The Competition and Markets Authority has been looking into whether the deal would damage competition in either restaurant delivery or online convenience grocery delivery.

The decision to let the investment go ahead gives Amazon a 16 per cent stake in the food delivery company.

Back in April the CMA said it would provisionally approve Amazon’s investment after Deliveroo warned it could fold without the cash injection.

“This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality,” Stuart McIntosh, chair of the CMA’s independent inquiry group, said at the time.

“Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo.”

Now, the latest move confirms that the CMA does not expect the deal to impact competition in any case.

McIntosh said today: “The impact of the coronavirus pandemic, while initially extremely challenging, has not been as severe for Deliveroo as was anticipated when we reached our initial provisional findings in April. 

“The updated evidence no longer shows that Deliveroo would exit the market in the absence of this transaction. This has required us to re-evaluate our initial provisional findings.

“We’ve carefully considered how this investment could affect competition between the two businesses in future.

“Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers.”

A Deliveroo spokesperson said: “This minority investment is good news for UK customers and restaurants, and for the British economy.

“As we have argued for the past year, since the beginning of the CMA’s investigation, the minority investment will enable British born, British bred Deliveroo to compete against well-capitalised overseas rivals and continue to innovate for customers, riders and restaurants.

“As the British economy recovers from the damage caused by Covid 19, a stable regulatory environment is critical. We therefore urge the CMA to conclude their review as swiftly as possible.”