The competitions watchdog is to launch an in-depth investigation into a planned investment by Amazon into Deliveroo amid claims that the US retail giant could be planning to re-enter the food delivery market.
The Competitions and Markets Authority said that its initial investigations found that Amazon’s involvement as a lead investor in a £452 million funding round in Deliveroo raised “serious competition concerns for UK customers” - and said it may hold a full-scale probe.
It warned that the deal could damage competition in online restaurant food delivery by discouraging Amazon from re-entering the food delivery market in the UK - and that it could also could also hit competition in the emerging market for online convenience grocery delivery.
The CMA revealed that although Amazon is no longer in the restaurant delivery market, evidence it had uncovered in Amazon’s internal business documents “shows a strong, continued interest in this sector and a material likelihood that Amazon would look to re-enter”. Amazon previously offered a similar service, Amazon Restaurants UK, in competition with Deliveroo until 2018, when it exited the market.
The watchdog also said that although several supermarkets and online food platforms are experimenting with convenience grocery delivery, Amazon and Deliveroo – which both have UK-wide delivery networks to support their operations – are two of the strongest players in this market at present.
Andrea Gomes da Silva, CMA executive director, said: “Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries.
“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.”
He added: “If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop. This is because the significant competition which could otherwise exist between Amazon and Deliveroo would be reduced.”
The CMA said that wile there are some differences in the services that Amazon and Deliveroo offer to customers, the CMA found that competition between them could increase in future as the market develops.
A spokesman for Deliveroo said: “Deliveroo has been working closely with the CMA and will continue to do so. We are confident that we will persuade the CMA of the facts that this minority investment will add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers. Deliveroo is a British company operating right across the country and this investment will be particularly beneficial to the UK economy.”