The competition regulator in the U.K. has officially stepped into Amazon’s investment in online food delivery group Deliveroo and decided it needs to be paused until it can complete an investigation. Amazon was the leading force behind a $575 million fundraising round for Deliveroo in May. Amazon made what both firms referred to as “a minority investment.”
Britain’s Competition and Markets Authority (CMA), however, has some concerns and has served an initial enforcement order (IEO) on the two companies. The order demands the firms work independent of one another for the time being — which means they cannot form a tie-in or work jointly as a single merged entity. The CMA will now take additional time to decide if it will launch a formal “Phase 1” probe.
Amazon’s interest in Deliveroo represents the firm’s long-term interest into applying its talent for logistics and last-mile shipping to food. Amazon shut down its in-house take on the market — Amazon Restaurants — both in the U.K. and the U.S. According to Deliveroo, the two firms are working overtime to bring regulators on board with their joint efforts. The two firms claim the investment will help Deliveroo grow its coverage, increase competition and boost the restaurant sector.
“We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service,” Amazon said in a statement.
Deliveroo noted that it was competing with a number of major companies in the sector and that Amazon’s funds are critical to adding both people to the employment roster and territory to their coverage area.
The IEO does not prevent the firms from talking to each other — but it does mean they cannot trade staff or “commercially sensitive information.” The IEO is a tool to make sure that two enterprises have not “ceased to be distinct,” or that arrangements are not in place that could force the two firms into “ceasing to be distinct.”
If the CMA were to undertake an investigation and find competition concerns, the two firms could then work to address those concerns — something that would be complicated by two firms that had already merged.
Neither Deliveroo nor Amazon has disclosed a figure for Amazon’s funding contribution.