A PYMNTS Company

Amazon Gets UK Approval To Own A Piece Of Deliveroo

 |  June 24, 2020

A year-long investigation into Amazon’s investment in Deliveroo, the UK food delivery service, has ended in favor of the world’s largest online marketplace.

The Competition and Markets Authority (CMA), the country’s competition watchdog, has ruled that the deal will not hurt shoppers, the Financial Times reported.  

On Wednesday, June 24, the CMA gave its provisional approval of Amazon’s US$575 million purchase of 16% percent of the food delivery company, which began one year ago. The latest move by the CMA appears to settle questions around the deal.

In March, PYMNTS reported that the proposed merger between Amazon and Deliveroo faced more scrutiny, because the CMA said the deal could hurt competition in the sector.

The agency also said it needs to determine how to move forward against the companies, especially since the workers have been designated as essential by the government.

In April, British regulators gave an initial green light for Amazon’s investment in Deliveroo, PYMNTS reported. But earlier this month, the CMA announced that it needed another two months to decide whether to let Amazon push forward with plans to buy a minority stake in the delivery service.

Now, the CMA states it’s not worried about competition, the Times reported. “Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers,” Stuart McIntosh, chair of the CMA inquiry, told the newspaper.

One attorney with knowledge of the deal said Amazon’s purchase of a stake in Deliveroo should never have resulted in a one-year investigation. 

“The CMA is gradually backtracking, having first used a ‘failing firm’ defense and then saying it’s fine because it is a minority shareholding,” the lawyer told the Times.

In response to the decision, Deliveroo said, “As the British economy recovers from the damage caused by COVID-19, a stable regulatory environment is critical. We therefore urge the CMA to conclude their review as swiftly as possible.”

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