Amazon has won a major victory in its push into the booming food delivery business, with the United Kingdom’s top competition watchdog giving a green light to the tech giant’s purchase of a minority stake in Deliveroo.
The U.K.’s Competition and Markets Authority (CMA) on Tuesday (Aug. 4) ruled that Amazon’s acquisition of a 16 percent stake in Deliveroo would not significantly dampen competition as the online delivery service battles it out for market share with rivals Just Eat Takeaway, Uber Eats and Domino’s.
Amazon last year announced a $575 million deal to buy a stake in Deliveroo, only to have the transaction held up by the U.K. regulator over concerns the deal might hurt competition in the restaurant delivery sector.
However, by April, the CMA had significantly shifted its position on the deal in wake of the coronavirus crisis.
Reversing course, U.K. regulators gave preliminary permission for the deal to move forward, citing documents produced by Deliveroo that indicated the firm was likely to go under without the injection of cash from Amazon.
Still, as the food delivery sector took off in the following months, the CMA said it once again returned to the question of whether the deal would inhibit competition.
In its decision Tuesday, the CMA warned that while Amazon’s minority stake in Deliveroo would not significantly decrease competition, that could change should Amazon move to “acquire a greater level of control” over the company, such as buying a controlling interest in the food delivery service.
“When looking at any merger, the CMA’s role is to assess whether consumers will lose out from a substantial lessening of competition,” said Stuart McIntosh, who oversaw the review at the U.K. regulator, in a press release. “We have not found this to be the case given the scale of Amazon’s current investment, but if it were to increase its shareholding in Deliveroo, that could trigger a further investigation by the CMA.”