Amazon 's mega-investment into UK food delivery startupDeliveroo was provisionally greenlit on Friday by the competition regulator.- Amazon had led a $575 million investment into Deliveroo in May 2019, but saw its investment frozen thanks to concerns from the regulator.
- But the regulator noted Deliveroo's "deteriorating" financial situation in light of the pandemic, and said on Friday it would provisionally approve the investment.
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Amazon's investment in UK food delivery startup Deliveroo was given a provisional green light on Friday by the UK's competition regulator, which noted the negative impact of COVID-19 on the startup's finances.
Amazon led a $575 million funding round in Deliveroo in May 2019, but the investment was iced after the Competition and Markets Authority raised antitrust concerns.
The regulator feared the investment would deter Amazon from entering the online food and grocery delivery space in the UK as a competitor to Deliveroo.
But the coronavirus pandemic has forced every major economy, including the UK, into lockdown. Deliveroo, which ferries takeaway food to consumers through a network of delivery riders, has seen a contraction in its business thanks to restaurants closing their doors.
The CMA noted that the firm's financial situation had "deteriorated", despite expanding its grocery deliveries.
It said the additional grocery sales have not made up for lost revenue for losses in its restaurant business, and the British startup needs Amazon's investment to survive.
"It has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo's business," the CMA said on Friday.
Deliveroo said in a statement: "We are delighted that the CMA has found that Amazon can invest in Deliveroo. This investment is a key part of Deliveroo's plan to provide an even better service to customers, rides and restaurants, and as we're a British company, this will be a boost to the British economy."
Stuart McIntosh, chair of the CMA's independent inquiry group, said: "Without additional investment, which we currently think is only realistically available from Amazon, it's clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market."
McIntosh added: "This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality and faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon's investment in Deliveroo."
The CMA has set a deadline of May 11 2020 to gather views on the provision findings and will assess all evidence before making a final decision.
The regulator has until 11 June 2020 to provide a final report.
This is a developing story...
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