UK regulator looks into Amazon's Deliveroo investment

Amazon and Deliveroo face investigation as deal put on hold

Amazon and Deliveroo face investigation as deal put on hold

Attempts by Amazon to eat into the United Kingdom food delivery sector suffered a blow on Friday when the competition watchdog revealed it was launching an inquiry into a deal with Deliveroo.

The Competition and Markets Authority said it served a Phase 1 enforcement order on Amazon and Roofoods, which trades as Deliveroo. The food delivery service said it would use the investment to grow its engineering team in its London headquarters and expand its delivery reach to new customers.

In its announcement yesterday, the CMA said there were reasons to believe Amazon's investment in Deliveroo may eventually lead to the firm ceasing to be distinct.

In a statement Friday, Amazon defended its investment. In the United States, Amazon bought Whole Foods in 2017 to deliver groceries, and Amazon Prime members in some U.S., British, Japanese and German areas can order food through AmazonFresh.

The order requires Amazon and Deliveroo to operate independently for now, meaning they can not do things like transfer staff or commercially sensitive information.

Amazon has unsuccessfully tried to launch its own food delivery service in Britain, with Amazon Restaurants UK, but closed the service in December after two years of operation.

The deal was not billed as a takeover by Amazon, and Deliveroo has a number of industry competitors such as Uber and Just Eats. That process could be compromised if the companies had already merged financially.

Bosses at Amazon have already tried to take on the two established rivals in the United Kingdom with the company's Amazon Restaurants service.

Neither Deliveroo or Amazon have disclosed a figure for Amazon's funding contribution.

The vigilance had become tough as Andrew Tyrie joined as the Chairman of CMA in 2018.

The customer and supplier lists of both organisations must continue to be operated separately and "any negotiations with any existing or potential customers and suppliers in relation to the Deliveroo business will be carried out by the Deliveroo business alone", according to the CMA.

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