The competition watchdog has said it may be forced to launch an in-depth investigation into Amazon’s plans to invest in food delivery firm Deliveroo.
The Competition and Markets Authority (CMA) said it was worried the tie-up could increase delivery prices.
The regulator gave the two firms five days to address its concerns about competition in the food delivery space.
If they fail to impress the watchdog,the $ (m) £ 320 m) dealcould ultimately be blocked.
The CMA said that the investment may prevent Amazon from launching its own food delivery operation, a move which could reduce prices for customers in the future.
“Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of grocerie s, “said Andrea Gomes da Silva, executive director of the CMA.
” There are relatively few players in these markets, so we’re Concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses. “
She said that if the deal were to go ahead in its current form then there was a “real risk” that customers, restaurants and grocers would face higher prices and lower quality services.
In a statement, Deliveroo said it was confident it could persuade the CMA that Amazon’s investment would “add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers”.
Amazon said the investment would help Deliveroo develop new products and remain competitive.
It is not the first time Amazon has tried to enter the food delivery market in the UK.
The online retai ler briefly ran its own delivery venture, Amazon Restaurants UK, which it started in 2018 but closed Just two years later.
It was previously reported to have made approach to buy Deliveroo outright. Uber alsoreportedly had talkswith Deliveroo regarding an interest in buying it.
Deliveroo founder and chief executive Will Shu came up with the idea for the firm. after he moved from New York to London as a banking analyst. He was working long hours and was frustrated by the fact so few restaurants delivered, a service widely available in the US.
In the firm’s early days , Mr Shu delivered all the food himself on a motorbike, while Greg Orlowski, his co-founder who has since left the business, developed the booking technology from his home in the US. Mr Shu still claims to get on his bike once a week to deliver an order to customers in London, as a way of staying in touch with riders.
Deliveroo has grown quickly – last year it doubled the number of towns and cities it operates in, helping sales to surge by 168%.
However, losses deepened. to £ m in (****************************, from £ ma year earlier as the company splashed out £ m on technology and £ m on free insurance for its riders.
Sales grew to £ 575 m in the year to December 01575879, up from £ (m in 2019
Deliveroo operates in 168 markets outside the UK including Australia, France, Germany and Hong Kong.