The UK’s anti-competition authority has said it provisionally approved Amazon’s planned investment in British start-up Deliveroo, citing the food delivery company’s financial vulnerability amid the new coronavirus pandemic.
The decision effectively allows a $575m investment by Amazon to go ahead. The deal promises to give the e-commerce giant access to the rapidly growing delivery business in Europe at a time when the pandemic is exerting extreme pressure on the nascent industry worldwide.
The Competition and Markets Authority had been investigating the proposed investment over concerns that the deal could damage competition. On April 17, it concluded that Deliveroo’s exit from the market “would be worse for competition than allowing the Amazon investment to proceed.” The ruling was provisional, pending the completion of a full, formal review, expected to be completed in June.
Deliveroo had notified the watchdog that it would fail financially without the investment, providing evidence from its financial advisers, the CMA said.
“We are delighted that the CMA has found that Amazon can invest in Deliveroo,” a spokesman for Deliveroo said. In an e-mail statement an Amazon spokeswoman said, “Our investment will benefit both consumers of Deliveroo’s service and its small-business restaurant partners.”
Stuart McIntosh, chairman of CMA’s independent inquiry group, said that unprecedented circumstances had led to a refocusing of its investigation. He added that if Deliveroo were to exit from the market, some customers would be cut off from online food delivery, with others facing higher prices or a reduction in service quality.
“Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo,” Mr. McIntosh said.
Source: MarketScreener
