The UK’s Competition and Markets Authority (CMA) has launched an enquiry whether Amazon is effectively in the process of merging food delivery business Deliveroo into its operations.
The CMA says it has “reasonable grounds for suspecting that it is or may be the case that Amazon.com and [Deliveroo parent company] Roofoods, trading as Deliveroo, have ceased to be distinct and/or that arrangements are in progress or in contemplation which, if carried into effect, will result in Amazon and Deliveroo ceasing to be distinct.”
The CMA has ordered, in an initial enforcement order published today, that the two businesses are run separately until its investigation is completed. That includes not integrating IT systems, running customer and supplier lists separately and not sharing business secrets or commercially sensitive information any further than would be necessary in the normal course of business.
Today’s announcement news comes after restaurant delivery business Deliveroo said in May that Amazon was the largest investor in its latest, $575m, funding round.
But Amazon argues that this was not an acquisition but a minority investment, which does not give it control over Deliveroo, and that as a result of that investment it does not operate a restaurant food delivery business. It also argues that it is not a dominant force in the market. Even in retail, it says, the data shows it is significantly smaller than many other retailers.
In a statement, Amazon said: “We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service.”
A spokesperson for Deliveroo said: “Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals. There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition. This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers.”
Deliveroo was founded in 2013 by William Shu and Greg Orlowski. Today the London-based business works with more than 80,000 restaurants and takeaways, and with 60,000 riders working in 500 towns and cites in 14 markets.
Amazon, founded in 1994 by Jeff Bezos, is an Elite retailer in IRUK Top500 research.
Image courtesy of Deliveroo