Just Eat's Acquisition of Hungryhouse to Be Probed by CMA

(Bloomberg) -- Just Eat Plc’s 200 million-pound ($259 million) acquisition of Hungryhouse faces an in-depth probe by U.K. regulators over concerns it will lead to poorer service for British restaurants using either delivery service.

The planned merger will be referred to a Phase 2 investigation, the Competition and Markets Authority said in a statement Wednesday. Its concerns are based on the fact that the two are close competitors because of similar services and broad geographical coverage and a merger could lead to “worse terms” for its restaurant clients, the regulator said.

Just Eat agreed in December to buy Hungryhouse for from from Delivery Hero Holding GmbH to fend off growing competition from the competitors like Deliveroo, Ubereats and Amazon Restaurants, also cited in the CMA’s statement.

Just Eat has until May 17 to offer proposals to resolve the competition concerns to avoid the investigation the CMA said. The company said it was cooperating with the probe.

The CMA dismissed the strength of competition from a number of new entrants to the food delivery market.

Amazon.com Inc. extended its U.S. restaurant-delivery service to London in September, and Uber Technologies Inc. and closely-held Deliveroo also operate in the U.K. capital. The regulator said the three companies represent "less direct competition" as they target dine-in restaurants, rather than fast-food outlets.

In a separate statement, CMA said that it may investigate a merger between Capita and Vodafone Group Plc’s paging unit unless Capita provides proposals by May 17 on how it might resolve competition concerns CMA has about the two companies’ paging services.

--With assistance from Giles Turner

To contact the reporter on this story: Hugo Miller in Geneva at hugomiller@bloomberg.net.

To contact the editors responsible for this story: Alan Katz at akatz5@bloomberg.net, Anthony Aarons