Amazon's Investment in Deliveroo Raises 'Serious Competition Concerns,' Says U.K. Regulator

The U.K.'s Competition and Markets Authority said the move could be bad for British consumers.
Author:
Publish date:

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. 

Facebook, Amazon and Google are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells those? Learn more now