Amazon’s Deliveroo investment cleared by CMA

Amazon's Deliveroo investment approved by CMA

Amazon's move to acquire a stake in Deliveroo has been officially approved by the Competition and Market Authority (CMA).

The watchdog released the 16 percent investment following an in-depth investigation that found the move would not significantly affect competition.

The verdict comes after the CMA provisionally approved the transaction in April and made another judgment in June.

Investigation leader Stuart McIntosh said: "Today's final decision is the result of a thorough review of this business and the markets in which Amazon and Deliveroo operate.

"The first phase 1 review of the transaction by the CMA identified potential competition concerns, which the independent investigation group examined in depth during the phase 2 investigation.

"Given the higher legal standards that apply in phase 2, the group has concluded that the transaction will not result in a significant reduction in competition in either the delivery of restaurants or convenience foods.

"Our decision reflects the scale of Amazon's investment in Deliveroo (16 percent of the company's equity) and the incentives to compete in both markets.

"When considering a merger, the CMA's job is to assess whether consumers will lose by significantly reducing competition.

"We have determined that this is not the case given the size of Amazon's current investments. However, should the stake in Deliveroo increase, this could trigger further investigation by the CMA."

The CMA completed a first phase 1 investigation in December last year. At that point, she concluded that there was a "realistic prospect" that the transaction could affect competition.

She therefore referred the deal to an in-depth investigation into phase 2 to further evaluate potential competition concerns.

Deliveroo argued that the impact of the coronavirus pandemic on its business would cause it to fail financially and leave the market without Amazon's investment.

Given the seriousness and urgency of Deliveroo's financial situation, the CMA concluded that Deliveroo met the criteria for a “failing company” and that market entry for competitors and customers would have been worse than allowing the investment.

A CMA statement added: "After a review of Deliveroo's finances beginning in April 2020, it emerged that the food delivery market for restaurants had recovered much more than expected and that the & # 39; mix & # 39; 39; of the restaurant had also shifted towards smaller, independent restaurants and had moved away from large fast food chains, some of which were closed or no longer delivered to home.

"Both factors have contributed to a rapid and significant turnaround in Deliveroo's financial condition.

"Given these changed circumstances, the CMA concluded that Deliveroo can no longer be considered a failing company and that it would be necessary and appropriate to complete the content assessment of the CMA as to whether the transaction would result in a significant reduction in competition.

"The CMA's final decision to close the deal for competitive reasons is the result of a comprehensive analysis of internal documents from Amazon and Deliveroo, a survey of more than 3,000 consumers, and extensive submissions from interested third parties.

"The CMA's assessment focused on how a 16 percent stake from Amazon would affect the incentives to compete independently with Deliveroo in both the delivery of restaurants and the delivery of online convenience foods in the coming years .

"The CMA ultimately determined that this level of investment would not significantly reduce competition in both markets.

"However, should Amazon gain greater control over Deliveroo – for example, by acquiring a majority stake in the company – this could trigger further investigation by the CMA."

A Deliveroo spokesman said: "We are pleased that the CMA has completed its 15-month investigation and that Amazon's minority stake can now continue.

"This is fantastic news for UK customers and restaurants and the UK economy. Deliveroo, a UK-born company, will use the investment to increase customer choice and value, support restaurants and provide more drivers with flexible work that they value as that. " Company expands.

"Deliveroo is delighted that Amazon, the world's most customer-focused and innovative company, has shown such a vote of confidence in Deliveroo and has decided to invest in the company's future."

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