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Wed 16th Oct 2019 - CMA begins merger investigation into Amazon’s investment in Deliveroo
CMA begins merger investigation into Amazon’s investment in Deliveroo: The Competition and Markets Authority (CMA) has begun a merger investigation into Amazon’s investment in Deliveroo. The CMA issued an initial enforcement order against the companies in July after Amazon bought a stake in Deliveroo. Now the CMA has announced it has launched a full merger inquiry. Amazon was the lead investor in a $575m (£457m) financing round announced in May, which valued Deliveroo at more than £4bn. Amazon bought a minority stake in the company. The CMA stated: “The CMA is considering whether it is, or may be the case, this transaction will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the UK for goods or services. The CMA announced the launch of its merger inquiry by notice to the parties and has a deadline of 11 December for its phase one decision.” At the time of the enforcement order the CMA said it had “reasonable grounds” for suspecting Amazon and Roofoods, which trades as Deliveroo, had “ceased to be distinct” or were planning to merge, which would break competition rules. Amazon was tipped as a potential buyer for Deliveroo after its own effort at hot food delivery, Amazon Restaurants UK, shut in December barely two years after its launch. Deliveroo, which was founded in London by former investment banker Will Shu, had also been cited as a possible takeover target for Amazon amid heavy investment in technology. Under the enforcement order, Deliveroo was banned from taking any actions that could lead to its integration into Amazon’s business. Both businesses were forced to maintain their current level of service in the UK and were not allowed to make changes to big contracts or senior management without prior written permission from the CMA. Earlier this month, Deliveroo reported sales grew 72% to £476m for the year ending 31 December 2018, compared with £277m the previous year. Gross profit increased 42% to £91m, compared with £64.3m the year before. In 2018, loss before tax increased 16% to £232m, compared with £199m the previous year.

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