Amazon’s investment in UK-based food delivery company Deliveroo, as part of $575m (£457m) funding round, has hit a speed bump after the UK’s competition regulator stepped in to pause proceedings.
The Competition and Markets Authority (CMA) has decided to halt the transaction while it considers launching a full investigation into Amazon’s investment. The initial enforcement order served to Amazon and Deliveroo does not include a deadline.
The order, which was issued on 24 June 2019, states that the CMA has “reasonable grounds for suspecting” that Amazon and Roofoods, which trades as Deliveroo, have “ceased to be distinct” or that greenlighting the transaction would lead to a merger between the two.
During the pause to the deal, Deliveroo and Amazon must continue to operate entirely separately from one another, and they may not make any changes to organisational structure or staffing, while also not transferring any assets or intellectual property.
Deliveroo is arguing that the investment from Amazon will help to create jobs, help restaurants to grow, and improve choice for consumers.
“Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals,” said a Deliveroo spokesperson. “There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition.”
An Amazon spokesperson added: “We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service.”