Amazon allowed to give Deliveroo "vital" injection

Amazon allowed to give Deliveroo "vital" injection
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The British competition watchdog CMA has given Amazon the go-ahead to invest in Deliveroo, to avoid the possible bankruptcy of the meal delivery company because of the coronavirus crisis.

 

With some reluctance

Amazon's controversial investment in the British meal deliverer has been greenlit: the British competition watchdog has given its (provisionial) blessing, although the investigation is still ongoing. The corona crisis has had such an impact on the hospitality and meal delivery industry that Deliveroo was able to convince the antitrust authority that it was a matter of business-life and death.

 

Last year, Amazon took a minority stake in Deliveroo as the main backer in a new financing round that raised over 500 million euros. However, the CMA launched an investigation into the deal, worried that Amazon would become too dominant in the UK online convenience market. CMA is still investigating these concerns, but now the corona crisis has caused an unforeseen acceleration. Without Amazon's money - and soon - Deliveroo would go bankrupt and would have to leave the market, the courier company said.

 

No Amazon, no Deliveroo 

The CMA now follows that line of reasoning: "The ongoing ‘lockdown’ in the UK has resulted in the closure of a large number of the key restaurants available through Deliveroo, and a significant decline in revenues. While Deliveroo has sought to expand its supply of convenience groceries during the crisis, these sales are limited and have not made up for losses in its restaurants business", according to the British government.

 

"Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market. (...) Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo", Stuart McIntosh, Chair of the CMA’s independent inquiry group, said. The  deadline for the CMA’s final report is 11 June.