A $500m investment by Amazon into food delivery giant Deliveroo could spark a formal competition probe, it has been revealed.
The Competition & Markets Authority (CMA) said the deal earlier this year could affect competition in both the fast-food and emerging ‘same-day’ grocery delivery markets.
It said despite the closure of the Amazon Restaurant business, internal documents have revealed continued interest from the firm in the sector.
The UK watchdog said the deal could also damage competition in the emerging market for online convenience grocery delivery, where the two companies have already established market-leading positions. The exact value of Amazon’s stake in Deliveroo is not known.
There are only a small number of suppliers offering the “ultra-fast” delivery of groceries in the UK.
Although several supermarkets and online food platforms are experimenting with convenience grocery delivery, Amazon and Deliveroo – which both have UK-wide delivery networks to support their operations – are two of the strongest players in this market at present.
While there are some differences in the services that Amazon and Deliveroo offer to customers, the CMA found that competition between them could increase in future as the market develops.
Andrea Gomes da Silva, CMA Executive Director, said: “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.
“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.
“If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop. This is because the significant competition which could otherwise exist between Amazon and Deliveroo would be reduced.”
The companies now have five working days to offer legally-binding proposals to the CMA to address the competition concerns identified. The CMA would then have five working days to consider whether to accept the offer instead of referring the case to an in-depth investigation.
All information relating to this case can be found on the Amazon / Deliveroo inquiry page.