Amazon's investment in British online food delivery service Deliveroo raises "serious competition concerns" said a British regulatory agency on Wednesday.
The UK's Competition and Markets Authority (CMA) released a report saying the concerns could require an "in-depth investigation." The CMA had halted Amazon's investment in Deliveroo in July, pending an investigation.
Amazon shares were down 0.5% to $1,741 in early trading on Wednesday.
In May, Amazon led a $575 million investment round in Deliveroo. Prior to the investment, the company, one of the most popular food delivery companies in Europe, had been valued at $2 billion. Deliveroo, which is similar to U.S. food delivery service, DoorDash, reportedly generated about $364 million in revenue in 2017.
Although Amazon only has a minority stake in Deliveroo, the CMA said "the deal could damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK." Amazon had shut down its own restaurant delivery service in the U.K. in December. The agency noted that there are currently only a small number of players in online food delivery in the U.K. and that an Amazon re-entry would put pressure on prices, a positive for British consumers.
For the delivery of groceries specifically, Amazon's investment in the British start-up could damage competition in a space "where the 2 companies have already established market-leading positions," the CMA said.
The two companies now have five days to submit a formal solution to address the CMA's concern. Once they do so, the CMA can choose to either accept the proposed solution or to refer the case to an "in-depth investigation."
Amazon has been at the center of anti-trust concerns in the U.S., along with big-tech peers Facebook and Google. Uber and Lyft have also been the subject of regulatory concerns not relating to competition in the U.K.