Competition watchdog to examine Amazon-Deliveroo deal

Deliveroo's May funding round led by Amazon to be investigated by Competition and Markets Authority

The UK's Competition and Markets Authority (CMA) said on Friday that it was looking into potential breaches of competition rules arising from Amazon's recent funding into Deliveroo.

The competition regulator also revealed that it had served an executive order against Amazon and the food delivery firm, asking them to remain independent while it decides whether to start a formal investigation into the matter.

The authority further said it had "reasonable grounds" to suspect that Amazon and Deliveroo had either "ceased to be distinct" or plan to merge in near future.

Following the executive order, Amazon won't be able to close the deal with Deliveroo.

Both companies have also been directed to use separate supplier lists and to negotiate separately with potential suppliers or customers. In addition, they can't transfer key staff or share any sensitive information with each other.

In May, Amazon emerged as the major investor in $575 million funding round into the London-based start-up. The company said that its funding into Deliveroo would enable the firm to compete against rivals like Just Eat and Uber in a highly competitive market.

Last year, Amazon was forced to close down its own struggling food delivery service, Amazon Restaurants, due to tough competition.

Deliveroo's existing investors Greenoaks, T Rowe Price, and Fidelity Management also took part in the funding round, which valued Deliveroo at around £3 billion.

At that time, Deliveroo said that the funding would enable it to invest in its tech team and to reach new customers across the country.

Since its founding in 2012, Deliveroo has raised $1.5 billion in venture capital. The firm currently has about 15,000 riders in its workforce to deliver meals in the UK.

According to CEO Will Shu, the firm is now looks to reach about 50 per cent of the UK's population by the end of the year, up from the 33 per cent who are currently using its mobile app.

"Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals," a Deliveroo spokesman told Bloomberg in a statement.

"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."

Amazon has been keen to invest in the UK in recent years. In addition to maintaining the UK Whole Foods stores it acquired in 2017, it is planning to open a number of pop-up stores, and this week announced plans to create some 2,000 jobs in further investments in the UK this year.