Under the deal, Amazon will own 16% of Deliveroo as the lead investor in a $575m funding round that was first announced in May 2019.
The CMA had previously halted the deal, saying that it believed consumers would have less choice as a result of the tie up and that it would discourage Amazon from re-entering the online restaurant food market and further developing its presence within the online convenience grocery delivery market in the UK.
However, following a two-phase and 15-month examination of whether or not the deal would create competition concerns, which included a culmination of extensive analyses of internal documents from both businesses, a survey of more than 3,000 consumers and extensive submissions from interested third parties, the watchdog has now given it the green light.
The CMA’s assessment focussed primarily on how a 16% shareholding held by Amazon would affect its incentives to compete independently with Deliveroo in both restaurant delivery and online convenience grocery delivery in the coming years.
Despite various operators in the sector expressing a strong opposition to the deal, the watchdog ultimately concluded that this level of investment will not substantially lessen competition in either market, but has said that should Amazon look to acquire a greater level of control in the Delivery company, a further investigation could go ahead.
“Today’s final decision is the result of a thorough examination of this deal and the markets in which Amazon and Deliveroo operate,” said Stuart McIntosh, inquiry chair.
“When looking at any merger, the CMA’s role is to assess whether consumers will lose out from a substantial lessening of competition. We have not found this to be the case given the scale of Amazon’s current investment, but if it were to increase its shareholding in Deliveroo, that could trigger a further investigation by the CMA.”