The Competition and Markets Authority (CMA) has provisionally cleared Amazon’s 16 per cent investment in Deliveroo, on the basis that it is not likely to result in a substantial lessening of competition.

In its initial provisional findings, published in April, the CMA cleared Amazon’s investment on the basis that Deliveroo would have exited the market without it, because of the negative impact of the Coronavirus on its business.

The CMA considered that the imminent exit of Deliveroo would have been worse for competition than allowing the Amazon investment to proceed.

Since its initial provisional findings, the CMA has continued to gather and analyse evidence.

A detailed assessment of Deliveroo’s finances shows considerable improvement in its financial position, reflecting, in part, changes which were not foreseeable during the early stages of the pandemic. Consequently, the CMA has now provisionally concluded that Deliveroo would no longer be likely to exit the market in the absence of this transaction.

Given this, the CMA is instead required to base its provisional decision specifically on the impact of the transaction on competition between the two businesses.

After reviewing extensive evidence, including large volumes of internal documents from Amazon and Deliveroo, a survey of over 3,000 consumers, and extensive submissions from interested third parties, the CMA found that the investment should be cleared because it is not expected to damage competition in either restaurant delivery or online convenience grocery delivery.

Were Amazon to acquire a greater level of control over Deliveroo, in particular by making a full acquisition of the company, this could trigger a further investigation by the CMA.

Inquiry chair Stuart McIntosh said: “We’ve carefully considered how this investment could affect competition between the two businesses in future – looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers.”

The CMA is now asking for views on these provisional findings by 10 July and will assess all evidence provided before making a final decision. The statutory deadline for the CMA’s final report is 6 August.

Amazon invested in Deliveroo last May, as part of a £450 million fundraising round for the food delivery app.

Two months later, the CMA halted the deal to weigh up any potential breaches of competition rules, before raising "serious concerns" at the end of the year.

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