Amazon finally gets regulator approval to gobble up minority stake in Deliveroo

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Amazon AMZN e-commerce giant,
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On Tuesday, got approval from the UK competition watchdog to take a stake in UK food delivery platform Deliveroo.
The Competition and Markets Authority (CMA) decision ends its 15-month investigation into Amazon’s investment in Deliveroo, which is part of a $ 575 million fundraiser that saw others invest in 2019.

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The investigation focused on whether Amazon’s 16% stake in Deliveroo would hurt competition and whether it would reduce its chances of entering the market as a competitor itself.

« [Amazon’s] strategic investor status is likely to increase the weight that Amazon’s views will carry with Deliveroo management and other investors and, in turn, increase its ability to influence Deliveroo’s business strategy ” , he said in a brief to the CMA.
He reviewed submissions from competitors including Just Eat Takeaway, TKWY,
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who argued that the investment would make Amazon less likely to enter the UK fast food delivery market and that it would be able to influence Deliveroo’s strategy in a way that harms competition.
In a December memo, investment bank Jefferies said the investigation “smacks of interventionism ‘not under my watch’,” attributing the case to negative political sentiment towards large U.S. internet companies in 2019.
But Andrea Gomes da Silva, executive director of the CMA, said at the time: “If the deal were to continue in its current form, there is a real risk that customers, restaurants and grocers could face higher prices and lower quality services. markets are developing. “
“This is because the significant competition that might otherwise exist between Amazon and Deliveroo would be reduced,” he added.
During the case, the CMA also considered whether, without the investment, Deliveroo would collapse under the financial pressure caused by Covid-19, provisionally offsetting the investment in April.
It continued its investigation and again provisionally authorized the investment in June after seeing a “considerable improvement” in Deliveroo’s financial situation.
He said the investment should go ahead as it would not hurt competition in restaurant delivery or convenience store delivery, although he continued to seek opinions and assess evidence on provisional findings.
But Tuesday’s decision officially paves the way for Amazon and the investment will continue.
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Stuart McIntosh, who chaired the investigation, said a further investigation could be triggered if Amazon seeks to increase its control over Deliveroo.

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