The competition and markets authority (CMA) has referred Amazon’s anticipated investment into online takeaway delivery company Deliveroo for an “in-depth investigation” amid concerns that it could raise “serious competition concerns for UK customers”.
In 2019, Amazon announced a substantial investment in Deliveroo, which would give it a minority shareholding along with certain other rights, allowing it to participate in the management of the company.
While Amazon would not take full control of Deliveroo’s business, an initial investigation by the CMA has concluded that, the investment, in its current form, could “harm competition in two ways”.
The phase 2 investigation will now seek to determine if the deal would damage competition in the emerging market for online convenience grocery delivery, where the CMA said the two companies had already established market-leading positions.
“Although several supermarkets and online food platforms are experimenting with convenience grocery delivery, Amazon and Deliveroo – which both have UK-wide delivery networks to support their operations – are two of the strongest players in this market at present,” the CMA said.
“While there are some differences in the services that Amazon and Deliveroo offer to customers, the CMA believes that competition between them could increase in future as the market develops,” it added.
The investigation will also address concerns that the deal could damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK.
Amazon offered this service in competition with Deliveroo until 2018, when it closed its Amazon Restaurants business.
CMA executive director Andrea Gomes da Silva, said: “Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries.
“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.
“If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop.
“This is because the significant competition which could otherwise exist between Amazon and Deliveroo would be reduced,” he added.