Amazon’s Deliveroo Investment Attracts U.K. Watchdog’s Attention
Food-delivery startup Deliveroo raised $575 million in a funding round led by the e-commerce giant
Britain’s competition regulator is reviewing Amazon.com Inc.’s AMZN -0.39% investment in U.K. food-delivery startup Deliveroo, as global regulators scrutinize potential antitrust issues amid an expansion by Silicon Valley giants into more markets.
The U.K. Competition and Markets Authority said Friday it had served an initial enforcement order in relation to the Amazon-Deliveroo deal, preventing the companies from integrating their operations while the regulator considers launching a formal investigation.
Deliveroo said in May that Amazon would lead a $575 million funding round in which the U.S. tech giant would become one of its biggest investors.
The CMA said Friday it was examining the deal because it believed the two companies had either “ceased to be distinct” or had made plans to that effect.
The specific antitrust issue about which the regulator is concerned is unclear. The enforcement notice didn’t give specifics and Amazon closed its own restaurant-delivery service in the U.K. late last year. It said it would shut a similar service in the U.S. in June.
A person close to Deliveroo expressed surprise at the CMA’s decision and said it was unclear how the regulator had determined that the two companies were merging parts of their operations.
“There’s no operations to merge,” the person said. “There’s not going to be any integration of the depth they’re suggesting.”
A spokesman for the CMA declined to comment beyond the enforcement notice.
The U.K. has been particularly aggressive in scrutinizing Silicon Valley firms, considering, for example, setting up a new regulator to look at a wide spectrum of online content. The European Commission has taken the lead in pursuing antitrust action against tech firms, taking aim at Alphabet Inc.’s Google and others.
Amazon in particular is also facing increased scrutiny from U.S. regulators, which could throttle the pace of its acquisitions, The Wall Street Journal has reported.
The company, whose deal-making style is to act quickly and quietly, has spent more than $20 billion on acquisitions and investments since the start of 2017, including its $13.7 billion purchase of WholeFoods.
The CMA’s initial enforcement order prevents the companies from taking action that might prejudice the outcome of any investigation or impede the regulator from ordering remedies.
A spokesman for Deliveroo said the U.K. company and Amazon had been working closely with regulators to obtain regulatory approvals and noted there were a number of other major companies in the food-delivery market.
An Amazon spokesman said its investment would enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs.
Deliveroo, whose delivery bikes are almost as common a sight on the streets of London as the city’s black cabs and double-decker buses, competes with Uber Technologies Inc.’s Uber Eats and other services in the U.K.
The service, which generates revenue by charging restaurants a commission and customers a flat fee on each order, launched in London in 2013. It doesn’t have a presence in the U.S. but operates in various countries across Europe, Asia-Pacific and the Middle East.