The UK competition watchdog fired a shot across the bows of Amazon today as it took aim at the tech giant’s multi-million investment in takeaways firm Deliveroo.
In a blow to the US firm’s ambitions in the UK food deliveries sector, the Competition and Markets Authority has served an initial enforcement order following the e-commerce behemoth’s stakebuilding in the company.
Such orders are only used when the regulator suspects two enterprises “have ceased to be distinct”, and it is understood the CMA will decide shortly whether to launch a full competition investigation.
Until a decision is taken, Amazon and Deliveroo cannot transfer staff or commercially sensitive information. The businesses will also be prevented from making changes to big contracts, although it does not prevent the two from talking to each other.
The watchdog’s decision comes after Amazon took a minority stake in Deliveroo in May, leading a £450 million funding round which valued the food deliveries firm at £3 billion.
Amazon hit back against the CMA following the order, stressing it is not a major player in the sector as it does not run a restaurant food deliveries business. It said: “This is not an acquisition. It is a minority investment. It is wrong to claim that Amazon is dominant.”
Deliveroo said: “Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals. There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition. This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers.”
In May, Deliveroo founder and chief executive Will Shu said he would use the latest funds for international expansion and to grow its kitchens business so that they can be rented to restaurants to meet demand. The funding also saw Deliveroo raise money from existing investors T Rowe Price, Fidelity and Greenoaks.
Analysts have said the two companies will inevitably integrate on some level, with customers ordering Deliveroo food on Amazon’s Echo devices.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Deliveroo competes in Britain with Just Eat and Uber Eats, which is also present in North America, South America, Europe, Asia and Africa. Shares in Just Eat were unmoved today.
” data-reactid=”19″>Deliveroo competes in Britain with Just Eat and Uber Eats, which is also present in North America, South America, Europe, Asia and Africa. Shares in Just Eat were unmoved today.
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