Index Ventures and Accel, two early investors in Deliveroo, are speaking out against the Competition and Markets Authority (CMA) in the U.K., which is currently conducting a probe into the company’s potential deal with Amazon, according to a report Tuesday (Jan. 28) by the Financial Times.
The investors are accusing the CMA of jeopardizing the deal. The CMA recently launched “phase two” of the investigations. Amazon plans to lead a funding round in the company with a $575 million investment.
The CMA said that it’s investigating because there are concerns of a dent to competition in the U.K. and the delivery industry as a whole. The CMA said that the delivery app market is “highly concentrated,” and that Amazon might have re-entered in another way if it didn’t invest in Deliveroo.
Neil Rimer, founding partner at Index Ventures, said that the investigation “sets a dangerous precedent.”
“If the CMA process is riddled with uncertainty, and its duration is a source of competitive harm, this will affect the incentive to start and invest in companies in the UK altogether,” Rimer said. “The irony is that in its effort to protect the competitive health of the markets, the CMA may inhibit competition and reduce British consumers’ choices.”
The CMA said that it would have a provisional answer by April, and plans for a final ruling by June 11.
“The UK’s fair regulatory environment and business-friendly government has enabled local founders to attract substantial investment from around the world and scale iconic, global companies,” said Luciana Lixandru, a partner at Accel, who is also a board member at Deliveroo. “The CMA’s actions are putting this at risk, and it’s vital that the UK and its ambitious entrepreneurs are able to continue to compete for funding which could otherwise go anywhere else in the world.”
The CMA said that both Deliveroo and Amazon were given the opportunity to avoid phase two by offering remedies, but they chose not to do so.
“We always endeavor to conduct our investigations as quickly as possible, whilst ensuring they are thorough,” said the CMA. “As the companies involved did not offer solutions to the competition concerns found, we have now moved on to an in-depth investigation.”