The UK’s competition watchdog said on Wednesday that it had launched the first phase of an investigation into Amazon’s investment in food delivery company Deliveroo.
The Competition and Markets Authority said that it was considering whether the e-commerce giant’s investment might constitute a merger, and whether there could be “a substantial lessening of competition” within the United Kingdom as a result.
While the extent of Amazon’s stake has not been publicly disclosed, it was the lead investor in a $575m (£457m) funding round announced by Deliveroo in May.
The watchdog had signalled in July that it had “reasonable grounds for suspecting” that the two companies were planning on a merger that could violate UK competition rules.
Both Amazon (AMZN) and Deliveroo maintain that Amazon’s investment in the delivery company gave the giant only a minority stake.
Deliveroo said on Wednesday that it is “co-operating fully” with the investigation, and that Amazon’s investment would “help to create jobs, help restaurants to grow their businesses, improve choice for consumers and enhance competition.”
Amazon declined to comment. The authority has until 11 December to determine whether the move would have a considerable dampening effect on competition in the food delivery market.
If it determines that this is the case, Amazon and Deliveroo can put forward solutions in a bid to prevent the watchdog from launching the second phase of the investigation.
Deliveroo was founded in London in 2013 by Will Shu, a former investment banker. It has since become a giant in its own right, and has raised more than $1.5bn dollars in funding. The company is valued at more than $2bn.
Part of the watchdog’s probe will likely focus on Amazon Fresh, a grocery delivery service that capitalises on the giant’s considerable logistics prowess.
The service launched for the company’s Prime members in 2016. Amazon’s previous foray into food delivery in the UK, Amazon Restaurants, was axed in 2018.
Also available to Prime customers, the takeaway service had only expanded to London in its two years of operation before it was forced out of the market due to stiff competition from Deliveroo and Uber Eats.