Amazon told to answer Deliveroo deal concerns in five days

December 11, 2019 by No Comments

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The competition watchdog has said it may be forced to launch an investigation into Amazon’s plans to invest in food delivery firm Deliveroo.

The Competition and Markets Authority (CMA) said it was worried the tie-up could increase delivery prices.

It gave the two firms five days to prove that the deal would not hurt competition for food delivery.

If they fail to impress the watchdog, the $575m (£437m) deal could ultimately be blocked.

The CMA said that the investment may prevent Amazon from launching its own food delivery operation, a move which could reduce prices for customers in the future.

“Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries,” the executive director of the CMA Andrea Gomes da Silva said in a statement.

“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.”

She said that if the deal were to go ahead in its current form then there was a “real risk” that customers, restaurants and grocers would face higher prices and lower quality services.

It is not the first time Amazon has tried to enter the food delivery market in the UK.

The online retailer briefly ran its own delivery venture, Amazon Restaurants UK, which it started in 2016 but closed just two years later.

It had previously been reported to have made approaches to buy Deliveroo outright. Uber also reportedly had talks with Deliveroo regarding an interest in buying it.

Deliveroo has grown quickly – last year it doubled the number of towns and cities it operates in, helping sales to surge by 72%.

However, losses deepened to £232m in 2018, from £199m a year earlier as the company splashed out £18m on technology and £10m on free insurance for its riders.

Sales grew to £476m in the year to December 2018, up from £277m in 2017.

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