CMA provisionally approves Amazon’s investment in Deliveroo to prevent its otherwise ‘inevitable exit from the market’

The Competition and Markets Authority has provisionally cleared the Amazon and Deliveroo deal following evidence that the delivery giant would collapse without the investment.

In May last year, Amazon was the lead investor in Deliveroo’s $575m Series G preferred shared funding round, but the funds were frozen by the watchdog amid concerns the deal could damage competition in discouraging Amazon from re-entering the online food market.

However, having been given evidence by Deliveroo’s financial advisors of the potentially fatal impact the coronavirus pandemic could have on the delivery giant, the CMA has provisionally cleared the deal.

“The CMA has been considering this new evidence as a matter of urgency,” read a statement on its website.

“It has provisionally concluded that Deliveroo’s exit from the market would be inevitable without access to significant additional funding, which the CMA considers that only Amazon would be willing and able to provide at this time.”

“The CMA currently considers that the imminent exit of Deliveroo would be worse for competition than allowing the Amazon investment to proceed and has therefore provisionally found that the deal should be cleared.”

A Deliveroo spokesperson said: “We are delighted the CMA has found that Amazon can invest in Deliveroo. 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.”

Before finalising its decision, the authority has asked for views on its provisional findings to be submitted by 11 May, which it will assess ahead of its final report on 11 June.