Amazon’s Deliveroo Deal Faces Review From U.K. Watchdog
A food delivery box sits on the back of a Deliveroo, operated by Roofoods Ltd., driver’s scooter parked on a street in London, U.K. (Photographer: Simon Dawson/Bloomberg)

Amazon’s Deliveroo Deal Faces Review From U.K. Watchdog

(Bloomberg) --

The U.K. competition regulator has started a review into Inc.’s bid to buy a slice of fast-growing food delivery startup Deliveroo, adding to the e-tailing giant’s antitrust woes around the globe.

The Competition and Markets Authority said on its website Wednesday it’s investigating the purchase of rights and a minority shareholding in Roofoods Ltd., which does business under the Deliveroo brand. The first phase will wrap up by Dec. 11, it said.

The investigation comes after the regulator said in July it had “reasonable grounds” to believe Amazon and Deliveroo, which operates a fleet of smartphone-navigated scooters and bicycles to deliver food from local restaurants, had either ceased to be separate operations or were close to merging. While CMA reviews into mergers are relatively common, it’s unusual for the regulator to examine acquisitions of minority stakes.

A spokesman for Amazon declined to comment, while a representative for Deliveroo didn’t immediately return a message inquiring about the review.

U.S. Democratic presidential contender Elizabeth Warren on Tuesday called out Amazon for running an online marketplace and competing with third-party sellers on the platform as the European Union’s competition czar investigates whether the company is shortchanging smaller merchants in that dual role. Amazon also faces separate antitrust scrutiny from the U.S. Federal Trade Commission and Justice Department.

Cash Injection

In May, Amazon said it would invest in a $575 million funding round to help the London-based startup expand its technology team and network after closing down its own food delivery business in the capital last year. U.K. food delivery has become fiercely competitive, and Deliveroo’s rivals include Just Eat Plc and Uber Technologies Inc.

That rivalry has driven acquisition talk across the industry. Just Eat and NV agreed in July to a 5 billion-pound ($6.4 billion) combination, less than six months after spent about $1 billion for the German operations of rival Delivery Hero SE. Spanish food delivery startup Glovo has also drawn preliminary interest from Uber and Deliveroo in recent months, people familiar with the matter said previously.

Deliveroo said this month that while global sales from its food-delivery business had increased 72% in 2018, profitability remained elusive. The company said it lost 232 million pounds last year compared to 199 million pounds a year earlier.

Amazon has signaled its growing ambitions in the U.K. grocery market with Prime Now, which delivers in major British cities within two hours. It faces stiff domestic competition from the likes of Ocado Group Plc, an online grocery pioneer that licenses its technology to the likes of Kroger Co. and aims to halve the Prime Now delivery time with a service called Zoom.

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