Amazon’s Deliveroo deal poses ‘real risk’ to food delivery market

A proposed investment deal between Amazon and Deliveroo “raises serious competition concerns” for the UK’s online food delivery market, according to the Competition and Markets Authority (CMA). 

Earlier this year, Amazon announced plans for a “substantial investment” in Deliveroo, which would make the retail giant minority shareholders of the delivery company. 

While the £437m deal would not give full control to Amazon, the CMA says it has “assessed how the deal could enable it to influence Deliveroo’s business strategy”.

It also considered the “effects this influence could have on competition in markets where the two companies compete at present”.

The CMA concluded the deal would harm competition in this particular market and push up prices for consumers. 

It is concerned the deal could damage competition in online restaurant food delivery by discouraging Amazon from re-entering the UK market, when a potential re-entry would “significantly increase competition in online restaurant food delivery in the UK”.

It is also concerned the deal would damage competition in the online convenience grocery delivery market, where both companies have already established leading positions.

Andrea Gomes da Silva, executive director at CMA, said: “Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries.

“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the 2 businesses.”

She added: “If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop. 

“This is because the significant competition which could otherwise exist between Amazon and Deliveroo would be reduced.”

Both companies have five working days to offer legally-binding proposals to the CMA to address competition concerns that have been identified. The CMA then has five working days to decide if it accepts the offer or moves on to an in-depth investigation.