- Amazon and Deliveroo rubbished claims that an investment tie-up would reduce competition in UK food delivery sector.
- The UK’s Competition and Markets Authority is conducting an in-depth probe into whether an Amazon-led $US575 million investment in Deliveroo would reduce consumer choice.
- In a joint submission published Wednesday, Amazon and Deliveroo argued they have “fundamentally different services.”
- A CMA spokesperson told Business Insider that Amazon’s investment in Deliveroo “would allow Amazon to influence the policy of Deliveroo going forwards and posed serious competition concerns.”
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Amazon and UK food delivery startup Deliveroo have rubbished claims that an investment tie-up between the two firms would reduce competition.
In a lengthy joint submission to the regulator published Wednesday, Amazon and Deliveroo argued that the two firms “are not actual competitors.”
The Competition and Markets Authority (CMA) is conducting an in-depth probe after Amazon led a $US575 million Series G fundraise by Deliveroo in May 2019. Neither Deliveroo nor Amazon have disclosed the extent of Amazon’s stake in the company, but Amazon does have a board seat as a result of the deal.
Founded and headquartered in London in 2013, Deliveroo is a food delivery startup comparable to (and competitive with) Uber Eats in terms of its service and business model. It currently operates in over 200 cities in 12 countries and is one of the most highly funded startups in Europe.
The CMA argues that Amazon’s investment reduces the chances of the US firm relaunching a food delivery business in the UK to compete with Deliveroo.
From 2016, Amazon ran its own food delivery venture, Amazon Restaurants, in the UK, but it pulled out of the country after two years. The tech giant discontinued Amazon Restaurants in the US the following year.
The watchdog also worries that the deal could reduce competition in online grocery delivery, a service which Amazon does offer in the UK.
But Deliveroo and Amazon argued in their submission that what they offer is “fundamentally different.”
The pair wrote that “their respective offerings… cater for different shopping missions (i.e., on-demand delivery of impulse/immediate consumption items vs full weekly shops delivered in a scheduled window).”
They added that the CMA had “conflated” weekly grocery shops with online food delivery.
The joint submission on Wednesday comes amid criticism of the CMA from two early backers of Deliveroo, who accused the regulator of jeopardizing future investment in British startups.
In an op-ed published Tuesday in the Financial Times, Index Ventures partner Neil Rimer said the CMA’s probe “sets a dangerous precedent,” while Accel partner and Deliveroo board member Luciana Lixandru told the FT that the “substantial investment from around the world” into UK startups was “at risk” because of it.
Index Ventures led Deliveroo’s £2.7 million ($US3.5 million) Series A raise in June 2014, while Accel led its $US25 million Series B in January 2015.
For its part, the CMA has robustly defended its investigation.
A CMA spokesperson told Business Insider that Amazon’s investment in Deliveroo “would allow Amazon to influence the policy of Deliveroo going forwards and posed serious competition concerns.”
Amazon and Deliveroo claim that the investment wouldn’t allow the retail giant to influence the startup, since it only holds one board seat.
The spokesperson continued: “That finding was based a very large body of evidence, which included thousands of Amazon and Deliveroo’s internal documents, and input from a wide range of third parties, such as customers and competitors.”
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