Amazon Cleared to Invest in Struggling Deliveroo Amid COVID-19 Crisis
The Competition and Markets Authority (CMA) has given the green light to Amazon’s investment in Deliveroo after coronavirus took a huge toll on the food delivery giant’s finances.
Initial Concerns Over Competition
Initially, the CMA feared the deal could harm competition. They worried Amazon might back off from re-entering the UK’s online restaurant delivery market or expanding its convenience grocery delivery services. But as the investigation deepened, the pandemic changed the game.
COVID-19 Pushes Deliveroo to Brink of Collapse
Lockdowns shuttered many restaurants, slashing Deliveroo’s revenue. Although Deliveroo tried to boost grocery deliveries, it wasn’t enough to stop the financial pain. The company warned the CMA it would fail and be forced out of the market without Amazon’s cash injection.
The CMA quickly reviewed the evidence, including financial data confirming Deliveroo’s dire straits. They concluded that without Amazon’s investment, Deliveroo’s exit was inevitable — a blow worse for competition than letting Amazon step in.
CMA Chair Speaks Out
Stuart McIntosh, CMA Inquiry Chair, said:
“These unprecedented times forced us to rethink this deal fast. Without Amazon’s backing, Deliveroo simply can’t survive. That would leave customers with fewer choices, higher prices, and poorer service. Given the stark choice, we’ve provisionally cleared Amazon’s investment.”
Next Steps
The CMA is calling for public feedback on its provisional decision until 5pm on Monday, 11 May 2020. After reviewing all responses, the watchdog will deliver a final verdict by the statutory deadline of 11 June 2020.
