- Amazon’s mega-investment into UK food delivery startup Deliveroo was provisionally greenlit on Friday by the competition regulator.
- Amazon had led a $US575 million investment into Deliveroo in May 2019, but saw its investment frozen thanks to concerns from the regulator.
- The regulator noted Deliveroo’s financial “deterioration” in light of the pandemic, and said on Friday it would provisionally approve the investment so the firm can stay afloat.
- The regulator will still review its provisional decision and make a final call in June.
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Amazon’s investment in UK food delivery startup Deliveroo was given a provisional green light on Friday by the UK’s competition regulator, which noted the negative impact of COVID-19 on the startup’s finances.
Amazon led a $US575 million funding round in Deliveroo in May 2019, but the investment was iced after the Competition and Markets Authority raised antitrust concerns.
The regulator feared the investment would deter Amazon from entering the online food and grocery delivery space in the UK as a competitor to Deliveroo. It was due to make a final report on the funding in June 2020.
But the coronavirus pandemic has forced every major economy, including the UK, into lockdown.
Deliveroo, which ferries takeaway food to consumers through a network of delivery riders, has seen a contraction in its business thanks to restaurants closing their doors.
In March, sources told BI that Deliveroo was highly frustrated by the lengthy competition probe and alarmed by the likely impact on its business.
The CMA noted a “deterioration” in Deliveroo’s finances, and said the startup warned it might collapse without access to fresh funds. The regulator said the additional grocery sales have not made up for lost revenue from its restaurant business.
“It has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo’s business,” the CMA said.
Deliveroo said in a statement: “We are delighted that the CMA has found that Amazon can invest in Deliveroo. This investment is a key part of Deliveroo’s plan to provide an even better service to customers, rides and restaurants, and as we’re a British company, this will be a boost to the British economy.”
Stuart McIntosh, chair of the CMA’s independent inquiry group, said: “Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market.”
McIntosh added: “This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality and faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo.”
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