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Just Eat slams watchdog's approval of Amazon's £442m investment in Deliveroo

Article Date: 2020-05-19

Just Eat has questioned whether the decline in the financial position of Deliveroo was “due to coronavirus or because of the quality of its business model”.

In its submission to the Competition and Markets Authority (CMA) into Amazon’s investment in Deliveroo, Just Eat said while it does not question the very serious and perturbing nature of the covid-19 crisis, it does not believe this “creates a ‘carte blanche’ to assume permanent, irreversible negative impact on businesses, particularly those who are in the business of delivering food to people at home in circumstances that align with social distancing rules”.

In its 28-page submission to the CMA, Just Eat stated: “While Deliveroo might have temporarily lost part of its supply, at the same time it also gained 3,000 new restaurants in the first weeks of the crisis alone. This should have generously compensated the loss of other restaurants. The majority of them did not perform delivery services before the coronavirus pandemic. This triggers Just Eat to question whether the decline in the financial position of Deliveroo was actually due to covid-19 or because of the quality of its business model and decision-making relating to its pricing. The CMA must therefore ascertain, with certainty, that Deliveroo's alleged dramatic drop in orders in the UK occurred as a result of the unavoidable impact of covid-19, rather than due to a failure on the part of Deliveroo to adapt effectively and grasp opportunities to service additional demand.”

Just Eat also pointed out Deliveroo had forged a number of grocery partnerships that “could have (easily) offset the effect of some restaurant closures in the UK”.

The submission added: “The sheer amount of new partnerships that Deliveroo has engaged in do not signal the company is in distress.”

The CMA provisionally cleared the deal last month after Deliveroo warned it would have to cease operations without the cash injection. Amazon was the lead investor in Deliveroo’s $575m funding round, announced in May last year. Its stake, thought to be worth about $500m, has been frozen by the regulator as it conducts an investigation into alleged competition concerns raised by the deal.

Last week Domino’s Pizza told the CMA that Amazon’s investment in Deliveroo would “result in driving small and independent food businesses out the market”. 

A Deliveroo spokesperson said: “This investment is a key part of Deliveroo’s plan to provide an even better service to customers, riders and restaurants and, as we’re a British company, this will be a boost to the UK economy.

“The unprecedented health crisis we all face has disrupted businesses across the country. This investment will help us to overcome immediate and long-term challenges, allow us to continue to improve our service for customers, enable us to develop new innovations and offer people even greater choice.

“Everyone at Deliveroo is excited that Amazon, the most customer-obsessed and innovative company in the world, has chosen to invest in Deliveroo’s future.”

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