LONDON — Just Eat’s planned acquisition of rival Hungryhouse is facing an “in-depth investigation” by regulators over “competition concerns” and worries it could hurt restaurants.
In December 2016, Just Eat announced its intent to acquire Hungryhouse for £200 million. But on Tuesday, the Competition and Markets Authority (CMA) announced that the merger of the two food delivery firms is being investigated over fears that it could harm competition, following an “initial investigation.”
Founded in 2001, Just Eat went public in 2014 and now operates in 13 markets with over 64,000 restaurants and 14 million customers worldwide, the company says.
“Following its initial investigation into the merger, the Competition and Markets Authority (CMA) has found that the companies are close competitors because of the similarity of their service and their broad geographical coverage,” the CMA said in a statement.
It believes that newer businesses in the market like UberEats and Deliveroo aren’t necessarily providing much “direct competition,” because “these tend to target different types of restaurant (primarily dine-in restaurants without their own delivery services). These recent entrants also offer less extensive geographic coverage than Just Eat and Hungryhouse.”
In short, the CMA says, it is “concerned that the loss of competition resulting from the Just Eat/Hungryhouse merger may result in worse terms for restaurants using either of the two companies.”
As such, the regulator will then refer the merger for an “in-depth phase 2 investigation” — unless Just Eat can assuage concerns before May 17.
In a statement, Just Eat said it was aware of the decision, and that it “looks forward to cooperating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction. In the meantime, Just Eat will continue to operate its business as usual.”
A spokesperson for the firm declined to comment further. A spokesperson for Hungryhouse did not immediately respond to a request for comment.