Amazon’s long perseverance to become a major investor in Deliveroo, one of the UK’s largest most effective delivery services, has finally paid off. Today the Competition and Markets Authority (CMA) has revealed that the company could proceed as the head investor in a funding round worth $575 million. The deal will give Amazon a 16% percent share in Deliveroo.
If Amazon were to acquire a bigger level of investment over Deliveroo, this could start a further investigation by CMA, the regulator explained in a press release. The CMA’s decision follows a provisional approval announced last April. The watchdog was majorly concerned that the deal would discourage Amazon from coming back to the UK market and reduce customer choice.
It also feard that the cash investment would make it difficult for newcomers to compete with Deliveroo or Amazon’s grocery services. The COVID-19 pandemic really had its effect on Deliveroo, though, and the food delivery company said it would be forced to leave the market without Amazon’s investment. Together with this new information, the CMA believed it was in everyone’s favor to let the deal go through.
“The CMA currently considers that the imminent exit of Deliveroo would be worse for competition than allowing the Amazon investment to proceed and has therefore provisionally found that the deal should be cleared,” the regulator said in a press conference at the moment. A lot can change in a couple of months, though. The food delivery market has restructured since April and, according to the CMA, rapidly improved Deliveroo’ s finances.
As such, the regulator couldn’t give approval to Amazon’s investment on the basis that Deliveroo couldn’t stand without it The CMA shifted diverted its focus instead onto the money involved and whether Amazon’s theoretical stake would affect its incentives to compete independently with Deliveroo in both restaurant delivery and online convenience grocery delivery in years to come.
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