The Competition and Markets Authority (CMA) has given Amazon the greenlight to invest £460m in Deliveroo after the food delivery service warned it would go bust without the funding.
The CMA had initially feared the deal would “damage competition by discouraging Amazon from re-entering the online restaurant food market and further developing its presence within the online […] grocery delivery market”.
But Deliveroo’s executives warned the regulator that without the minority investment from the US e-commerce giant, its business would collapse. The coronavirus outbreak has dealt a heavy blow to its business model, with a significant number of Deliveroo’s partner restaurants having been forced to close since lockdown came into effect last month.
“While Deliveroo has sought to expand its supply of convenience groceries during the crisis, these sales are limited and have not made up for losses in its restaurants business,” the CMA said in a statement. “As a result, Deliveroo recently informed the CMA that the impact of the coronavirus pandemic on its business meant that it would fail financially and exit the market without the Amazon investment.”
A spokesperson for Deliveroo told NS Tech: “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.”