As food delivery companies are surging in the UK in the wake of the coronavirus crisis, a proposed merger between Amazon and Deliveroo is under even more scrutiny, according to a report by Bloomberg.
The UK Competition and Markets Authority (CMA), which is the governmental agency that can approve the proposed deal, has contested two big upcoming tie ups: Amazon’s deal with Deliveroo as well as Takeaway.com’s proposed US$8 billion purchase of Just Eat.
The CMA states the mergers could hurt competition in the sector. The watchdog also needs to figure out how to move forward against the companies, especially since workers have been designated as essential by the government.
“The government is holding discussions with logistics firms about what they can do during the crisis,” said Dom Hallas, a spokesman for the Coalition for the Digital Economy.
He added that the CMA should be aware of the potential implications of the Deliveroo inquiry. “It’d be responsible for the CMA to be asking whether the probe threatens all of that.”
The CMA has been asking for Amazon to make some concessions before the Deliveroo deal is approved. Meanwhile, Deliveroo has seen restaurant signups for its service increase by 86% in the last 14 days. Shares in Just Eat have recently jumped 11% as well.
The main concern is that the proposed mergers and investments will ultimately hurt competition in the region.
Deliveroo stated it was “confident that we will persuade the CMA of the facts that this minority investment will add to the competition.”
CMA upped the ante with its investigation when it announced that it became aware of internal Amazon documents claiming that Amazon would launch its own food delivery service in the region if the Deliveroo investment deal didn’t move forward. This concerns the CMA because the deal would potentially remove a competitor and hurt competition in the sphere.
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