Fri, 5th Jul 2019
The Competition and Markets Authority has issued an initial enforcement order against Amazon and Deliveroo after Amazon purchased a stake in the food delivery company.
Amazon was the lead investor in a major financing round announced in May, which raised £457 million for Deliveroo, and valued the company overall at more than £4 billion. Amazon purchased a minority stake in the company, but the Competition and Markets Authority signed the order noting that they had reasonable grounds for suspecting that Roofoods (the company behind Deliveroo) and Amazon, had either ceased to be distinct or had plans to merge, in breach of competition rules.
Amazon’s decision to enter the sector was not well received by Deliveroo’s competition, with shares in Just Eat, Hero, and Takeaway.com all falling. Amazon has been tipped as a likely purchaser for Deliveroo since it shut down its own delivery arm, Amazon Restaurants UK, in December, around two years after opening.
The CMA’s order means that Deliveroo is not allowed to take any action which would bring about the integration of the two businesses while the regulator is deliberating over the move. Both businesses will be expected to maintain their current level of service in the UK, and are not allowed to make any major changes to their management or contracts without first obtaining permission in writing from the CMA.
A spokesman for Deliveroo explained that the company is working with the regulator in order to obtain approval so that the two companies can work together to expand and innovate.