Amazon has been cleared by the UK Competition and Markets Authority to acquire a 16% interest in Deliveroo.
The CMA’s investigation into the deal centred on concerns Amazon entering the UK restaurant delivery market would stifle competition. Amazon agreed to pay £440 million for the 16% share of Deliveroo.
Concluding the investigation the CMA approved the investment stating: “It will not substantially lessen competition” in the restaurant delivery market.
During the investigation, Deliveroo said it could collapse without the support of and investment from Amazon due to the impact from the Covid-19 crisis.
After approving the 16% share buy, the CMA at the same time warned Amazon that an attempt at any later date to fully acquire Deliveroo could be subjected to another investigation.
It is difficult to envisage a strategy already in play at Amazon that will not see it move for a full acquisition in the near future. Watch this space…
Acquisitions in the delivery sector have seen much activity so far this year and the big ones came to life during the Covid-19 pandemic. As restaurants, pubs and cafes were all unable to open to welcome diners due to lockdown restrictions, delivery services boomed as the only available revenue stream open to hospitality and catering businesses.
The adjustment to operating post lockdown and the move to delivery services has seen many foodservice operators adapt and develop to the new market conditions. Delivery providers have never been in more demand and the prices paid for the recent acquisitions point to an expectation that this trend will continue.
Amazon forward acquiring Deliveroo – 7 August 2020 – Amazon forward acquiring Deliveroo