Competition regulator puts Amazon's Deliveroo stake on hold

Jeannie Matthews
July 8, 2019

The order comes roughly two months after Deliveroo announced Amazon would lead a United States dollars 575 Million funding round for the Company, making the e-commerce giant a minority shareholder.

The U.K.'s Competition and Markets Authority said it has "reasonable grounds for suspecting" that the agreement could "result in Amazon and Deliveroo ceasing to be distinct".

Deliveroo said the two companies were working closely to obtain a green light from the CMA, which could block the investment if it judges it to harm competition. The food delivery service said it would use the investment to grow its engineering team in its London headquarters and expand its delivery reach to new customers. Amazon has signaled its growing ambitions in the United Kingdom with Prime Now, which offers deliveries to major British cities within two hours.

Amazon closed its own United Kingdom delivery service after two years in December 2018.

For now, Deliveroo can continue delivering food in the United Kingdom, but the CMA has ruled that it must operate with a distinct company and must not make any "substantive changes" to the structure of the business while the it decides if it should launch a full investigation.

The watchdog's enforcement order does not prevent parties from continuing to talk to each other, but typically does prevent them from transferring key staff or the transfer of commercially sensitive information.

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Despite the fundraising, in May, said to be $575, both companies are yet to disclose the actual figure of Amazon's total funding contribution.

The food delivery sector is dominated by companies including GrubHub and Uber Eats. It also competes in Europe with and Delivery Hero.

The logo of Amazon is seen in Sao Paulo, Brazil October 17, 2017.

London-based Deliveroo has raised $1.5 billion in venture capital since it was founded in 2012 and its self-employed riders have become a familiar sight in many large cities.

In the United Kingdom, observers have noted a change of direction at the CMA since Chair Andrew Tyrie took over a year ago.

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