In its initial provisional
findings, published in April, the Competition and Markets
Authority (CMA) provisionally cleared Amazon’s investment on
the basis that Deliveroo would have exited the market without
it, because of the negative impact of the coronavirus
(COVID-19) pandemic on its business. The CMA considered that
the imminent exit of Deliveroo would have been worse for
competition than allowing the Amazon investment to proceed.
Since its initial provisional findings, the CMA has continued
to gather and analyse evidence. A detailed assessment of
Deliveroo’s finances shows considerable improvement in its
financial position, reflecting, in part, changes which were
not foreseeable during the early stages of the pandemic.
Consequently, the CMA has now provisionally concluded that
Deliveroo would no longer be likely to exit the market in the
absence of this transaction. Given this, the CMA is instead
required to base its provisional decision specifically on the
impact of the transaction on competition between the two
businesses.
The CMA has reviewed extensive evidence, including large
volumes of internal documents from Amazon and Deliveroo, a
survey of over 3,000 consumers, and extensive submissions
from interested third parties. It has focused, in particular,
on how the shareholding held by Amazon could affect its
incentives to compete independently with Deliveroo.
Based on this detailed analysis, the CMA has provisionally
found that the investment should be cleared because it is not
expected to damage competition in either restaurant delivery
or online convenience grocery delivery.
This decision reflects the 16% shareholding that Amazon is
acquiring at the present time. Were Amazon to acquire a
greater level of control over Deliveroo, in particular by
making a full acquisition of the company, this could trigger
a further investigation by the CMA.
Stuart McIntosh, Inquiry Chair, said:
The impact of the coronavirus pandemic, while initially
extremely challenging, has not been as severe for Deliveroo
as was anticipated when we reached our initial provisional
findings in April.
The updated evidence no longer shows that Deliveroo would
exit the market in the absence of this transaction. This
has required us to re-evaluate our initial provisional
findings.
We’ve carefully considered how this investment could affect
competition between the two businesses in future. Looking
closely at the size of the shareholding and how it will
affect Amazon’s incentives, as well as the competition that
the businesses will continue to face in food delivery and
convenience groceries, we’ve found that the investment
should not have a negative impact on customers.
The CMA is now asking for views on these provisional findings
by 10 July 2020 and will assess all evidence provided before
making a final decision. The statutory deadline for the CMA’s
final report is 6 August 2020.
For more information, visit the Amazon / Deliveroo
merger inquiry page.
