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Wed 11th Dec 2019 - CMA – Amazon’s investment in Deliveroo raises ‘serious competition concerns’
CMA – Amazon’s investment in Deliveroo raises ‘serious competition concerns’: Amazon’s purchase of a stake in online food delivery group Deliveroo has raised “serious competition concerns” that may require an in-depth investigation, the Competition and Markets Authority (CMA) has said. Amazon led a $575m fund-raise in Deliveroo in May, making what the two parties called “a minority investment” and going up against UberEats, Just Eat and in the global race to dominate the market for takeaway meal deliveries. After completing a Phase 1 investigation, the CMA said it would proceed to an in-depth investigation if Amazon and Deliveroo failed to offer legally binding proposals that addressed its concerns. The CMA’s initial probe found the investment in its current form could harm competition in two ways. Firstly, the regulator is concerned the deal could damage competition in online restaurant food delivery by discouraging Amazon re-entering a market it exited last year. Secondly, the CMA said the deal could damage competition in the emerging market for online convenience grocery delivery, where Amazon and Deliveroo have already established market-leading positions. The CMA has given the two companies five working days to present their proposals. The regulator would then have five working days to consider whether to accept their offer instead of referring the case to an in-depth investigation. CMA executive director Andrea Gomes da Silva 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 Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses. If the deal were to proceed in its current form, there’s a real risk it could leave customers, restaurants and grocers facing higher prices and lower-quality services as these markets develop. This is because the significant competition that could otherwise exist between Amazon and Deliveroo would be reduced.” In October, 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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