Amazon Gets Second Green Light for 16% Stake in Deliveroo
(Bloomberg) -- The U.K.’s merger watchdog said it is still likely to approve Amazon.com Inc.’s minority investment in Deliveroo even as the regulator revised its reasons for doing so.
The Competition and Markets Authority gave preliminary approval Wednesday, saying Amazon’s 16% stake in Deliveroo wouldn’t hurt consumers. It had originally said it would clear the deal on the basis that the food-delivery startup would go out of business without the lifeline.
The decision comes a day after the U.K. government announced plans to speed up the easing of restrictions after the lockdown left many restaurants facing closure.
“The impact of the coronavirus pandemic, while initially extremely challenging, has not been as severe for Deliveroo as was anticipated when we reached our initial provisional findings in April,” Stuart McIntosh, who’s leading the probe for the CMA, said Wednesday in the statement on its website. “The updated evidence no longer shows that Deliveroo would exit the market in the absence of this transaction.”
The regulator’s initial findings came under criticism from competitors, which said the watchdog failed to consider at least one alternative funding source.
In the middle of the outbreak, Deliveroo told the CMA that without additional funds the company would run out of cash in the third quarter of this year and its directors would be required to start insolvency proceedings.
But Deliveroo’s actual performance in April 2020 was “significantly better than had been forecast,” the CMA said.
The revised ruling is a boost for Amazon and Deliveroo, who ran the risk that the regulator’s previous findings may have been challenged in court.
“As the British economy recovers from the damage caused by Covid-19, a stable regulatory environment is critical,” Deliveroo said in a statement. “We therefore urge the CMA to conclude their review as swiftly as possible.”
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