Amazon has gotten the green light from the U.K.'s competition watchdog.
Amazon will buy a minority stake in Deliveroo.
This ends a battle in which the firms had to convince regulators that the deal would not harm competition.
"The CMA typically has to determine whether, on the ‘balance of probabilities’, a transaction would lead to a substantial lessening of competition. However, in this case, Deliveroo argued that the impact of the coronavirus (COVID-19) pandemic on its business meant that it would fail financially and exit the market without the Amazon investment. Given the seriousness and urgency of Deliveroo’s financial situation the CMA concluded that Deliveroo met the criteria for a ‘failing firm’ and that its exit from the market would have been worse for competition and customers than allowing the investment to go ahead. The deal was provisionally cleared on that basis," the CMA wrote in its press release about the approval.
Amazon will be taking a 16% stake in the company.
"Today’s final decision is the result of a thorough examination of this deal and the markets in which Amazon and Deliveroo operate. The CMA’s initial Phase 1 review of the transaction highlighted potential competition concerns which the independent Inquiry Group has considered in detail during the Phase 2 investigation. Taking account of the higher legal standard that applies at Phase 2, the Group has concluded that the transaction will not result in a substantial lessening of competition in either restaurant delivery or convenience grocery delivery. Our decision reflects the scale of Amazon’s investment in Deliveroo (16% of the company’s equity) and its incentives to compete in both markets," said Stuart McIntosh, inquiry chair of the CMA.
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