The competition watchdog has cleared Amazon’s investment in Deliveroo after the UK company’s faced collapse because of coronavirus.
The Competition and Markets Authority (CMA) had been concerned the deal could damage competition by discouraging Amazon from re-entering the online restaurant food market and further developing its presence in the convenience grocery delivery market in the UK.
The CMA has continued to examine these concerns as part of an in-depth investigation.
However, in recent weeks, it said it had become clear the coronavirus pandemic was having “a significant negative impact” on Deliveroo’s business.
It said the ongoing lockdown in the UK has resulted in the closure of a large number of the restaurants available through Deliveroo, and a significant decline in revenues.
As a result, Deliveroo had told the CMA that the impact of coronavirus on its business meant that it would fail financially without the Amazon investment.
Deliveroo’s request was supported by evidence from the company’s financial advisers.
Stuart McIntosh, chair of the CMA’s independent inquiry group, said: “These wholly unprecedented circumstances have meant reassessing the focus of this investigation, reacting quickly to the impact of the coronavirus and deciding what it would mean for the businesses involved in this transaction and, in turn, for customers.
“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.
“This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality.
“Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo.”
The CMA is now seeking views on its provisional finding.