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Law360 (August 4, 2020, 4:05 PM EDT) -- British competition authorities gave their blessing Tuesday to a plan for Amazon to gobble up a 16% share of Deliveroo, the U.K. food dropoff service, after examining the deal for antitrust concerns but not finding enough reason to block it.
Despite some worries lodged with the government from Deliveroo rivals that Amazon's purchase of the stake will adversely affect them, the U.K. Competition and Markets Authority said Amazon's deal was unlikely to significantly cut into competition.
In June, the CMA signaled in provisional findings that it was no longer concerned Deliveroo would collapse because of COVID-19 without the infusion of Amazon capital and that the deal would not hurt consumers.
Monday's announcement backed up those tentative findings, saying a CMA inquiry group had focused since Dec. 27 on whether the deal would lead to a "substantial lessening of competition," or SLC.
"We have concluded that the anticipated acquisition by Amazon of certain rights and a 16% minority shareholding in Deliveroo may not be expected to result in an SLC within a market or markets in the UK for goods and services," the authority said in Monday's final report.
The CMA reviewed Amazon's acquisition of a 16% stake in Deliveroo as part of a $575 million funding round completed in May 2019 alongside existing investors T. Rowe Price, Fidelity Management & Research Co. and Greenoaks Capital.
Deliveroo said then it had then raised a total of $1.53 billion and would use the new infusion to help grow its engineering team in the U.K. and expand its services' reach.
The enforcement agency launched a probe that July and referred it for an in-depth review in December after finding it could discourage Amazon from reentering the online restaurant food delivery market in the U.K. The company closed its Amazon Restaurants business in the country in November 2018 and its U.S. version of the service last year.
The initial investigation also found issues in the market for grocery deliveries where Amazon and Deliveroo currently compete in the U.K.
But in April, the CMA provisionally cleared the move when Deliveroo told enforcers turmoil in the restaurant industry being caused by the pandemic made the investment necessary.
In a Tuesday email, an Amazon spokesperson told Law60 that "Deliveroo is an innovative, customer-obsessed company with a mission-driven leader and we're committed to this investment."
"Our investment will benefit both consumers of Deliveroo's service and its small business restaurant partners," according to the email. "U.K. businesses like Deliveroo continue to benefit from broad access to investors and supporters."
Deliveroo's corporate office in London issued a statement praising the CMA decision.
"This is fantastic news for UK customers and restaurants, and for the British economy. British born Deliveroo will use the investment to increase choice and value for customers, support for restaurants and will be able to offer more riders the flexible work they value as the company expands," a company spokesperson said in an email.
"Deliveroo is excited that Amazon, the most customer-obsessed and innovative company in the world, has shown such a huge vote of confidence in Deliveroo and chosen to invest in the company's future," the email added.
--Additional reporting by Matthew Perlman. Editing by Gemma Horowitz.
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