CMA clears Amazon's £442m Deliveroo stake despite delivery firm's coronavirus turnaround
Article Date: 2020-06-24
CMA determines Amazon investment in Deliveroo would not result in significant lessening of competition in restaurant or grocery sector
The Competition and Markets Authority (CMA) has determined Amazon’s investment in Deliveroo will not result in a significant lessening of competition in the restaurant or grocery sector.
The announcement means the CMA has reissued a provisional approval of Amazon’s £442m deal to buy a 16% stake in Deliveroo.
The watchdog said Amazon’s bid to gain a seat on Deliveroo’s board as part of the purchase would not entail superior voting rights to any other shareholder and meant there was not enough reason to block the deal.
The CMA said If Amazon was to acquire a greater level of control over Deliveroo, either de facto control or full control, “that would constitute a separate transaction and would itself be subject to possible review by the CMA”.
The decision could still be overturned before final approval and the CMA is now inviting comments on its findings by Friday, 10 July.
The CMA first provisionally approved Amazon’s bid in April, stating the food delivery startup could face collapse due to the impact of coronavirus and the cash to save it was “realistically only available from Amazon”.
“The CMA currently considers 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,” it said at the time.
However, the CMA said in its report it no longer believed the “failing firm” defence was valid, but its consideration of the investment purely on competition grounds had led it to the same conclusion.
The CMA has decided allowing the investment would not damage competition in either the restaurant delivery sector or in grocery deliveries, where Deliveroo has been expanding its presence during the coronavirus pandemic.