Amazon may be in hot water with the UK's Competition & Markets Authority (CMA). Earlier this year, the watchdog expressed concerns that Amazon's acquisition of a minority stake in Deliveroo, a UK food delivery company, could hurt competition. Now, CMA says Amazon has failed to address those initial concerns, and it has referred the deal for an in-depth investigation.
Amazon has failed to address our initial concerns that their investment in Deliveroo could be bad for customers, restaurants and grocers.— Competition & Markets Authority (@CMAgovUK) December 27, 2019
The deal will now be referred for an in depth, Phase 2, investigation.
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After its own takeout and delivery service failed in the UK, Amazon decided to join its competition Deliveroo and take on the likes of Uber Eats and GrubHub. Amazon became the largest investor in a $575 million Deliveroo funding round, reportedly acquiring a 16 percent stake in the company.
CMA fears that Amazon and Deliveroo could "cease to be distinct" or merge in the future, which could, theoretically, lead to customers facing higher prices or lower-quality services. According to The Guardian, CMA has the authority to block the investment completely or demand specific remedies from the companies, though it seems Amazon has not complied with CMA's initial demands.
In a statement provided to The Guardian, an Amazon spokesperson said:
"A homegrown UK business like Deliveroo should have broad access to investors and supporters. Amazon believes that this investment funding will lead to more pro-consumer innovation by helping Deliveroo continue to build its world-class service and remain competitive in the restaurant food delivery space by creating more highly skilled jobs, innovating in the restaurant food delivery sector, and developing new products for customers."