LONDON – Britain’s competition watchdog has provisionally approved Amazon’s plan to buy a stake in food delivery company Deliveroo, saying it would not have a negative impact on customers by reducing choice or raising prices.
The Competition and Markets authority approved a deal that will see Amazon take a 16% stake in the delivery platform. The authority warned it would re-assess if Amazon, which has a dominant presence in online retail, sought to increase its stake further.
“We’ve carefully considered how this investment could affect competition between the two businesses in future,’’ said the CMA’s Stuart McIntosh, who chaired the inquiry into the deal. “Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers.”
The investigation was important because it suggested that authorities are giving more scrutiny to the expansion of big tech firms. But it was mired in confusion.
While the deal had not been billed as a takeover by Amazon, the authority wanted to see if the agreement could “result in Amazon and Deliveroo ceasing to be distinct.”
Deliveroo described the approval as a win for British businesses.
“The minority investment will enable British born, British bred Deliveroo to compete against well-capitalized overseas rivals and continue to innovate for customers, riders and restaurants.'' it said. “As the British economy recovers from the damage caused by COVID-19, a stable regulatory environment is critical. We therefore urge the CMA to conclude their review as swiftly as possible.”
Deliveroo's delivery bikes and scooters are ubiquitous in many major cities, particularly in Europe. Besides Britain, it operates in several countries in the region and in Asia, including Germany, France, Italy and Australia.
The watchdog is set to make a final decision by Aug. 6.