Amazon’s planned 440 million pound purchase of a Deliveroo stake hasn’t come without questions.
The next big step for Amazon’s ambitions in Britain is the purchase of a stake in Deliveroo. However, the Competition and Markets Authority (CMA) has raised concerns over the planned deal’s potential to threaten competition in the UK.
The deal was announced in May, but the CMA has asked that the two companies address concerns that the purchase could prove “bad for customers, restaurants and grocers.” The CMA has stated that the two have failed to meet the December 18th deadline for a plan to address these concerns.
This investigation from the CMA has lasted since the deal was announced in May. Now, the investigation and the two companies’ failure to comply with the CMA request may put the deal at risk. This would drag Amazon’s first foray into the British food delivery industry to a halt.
The CMA is concerned that Amazon’s investment plans for Deliveroo could be used to stop the company from launching a British rival to Amazon. Such a move from Deliveroo would increase competition and likely reduce prices for British customers. The CMA has thus described the purchase as a “real risk.” “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,” said CMA executive director Andrea Gomes da Silva.
Amazon, for its part, has argued that this deal would allow Deliveroo to remain competitive while potentially becoming more innovative. Deliveroo released its own statement expressing confidence that the two can persuade the CMA that the purchase represents no threat to competition in the British food delivery sector.