Amazon’s Deliveroo tie-up forcibly put on hold by CMA
Amazon’s tie-up with delivery giant Deliveroo has been forcibly placed on hold by the UK’s competition authority while it considers whether to launch an investigation.
The Competition and Markets Authority (CMA) has issued an initial enforcement order regarding Amazon’s purchase of a minority stake in Deliveroo.
This follows news in May that the retailer had led a $575 million (£450 million) funding round for Deliveroo which saw it acquire an undisclosed minority stake in the business.
An initial enforcement order forces the two companies in question to remain independent of one another until the CMA determines whether to launch a formal investigation into the tie-up.
READ MORE: Amazon makes major investment in Deliveroo
It means the groups cannot operate as a merged entity or transfer any key staff or commercially sensitive information.
Analysts expect the two companies to integrate services by allowing users to order Deliveroo on Amazon’s Echo devices, and use the rapid delivery service to transport regular Amazon orders.
Amazon’s investment comes after it scrapped its own delivery rival Amazon Restaurant in the UK last December, suggesting it is planning to subsidise its failed service by using the well established Deliveroo.
Deliveroo, which now operates in 14 countries after being launched in the UK in 2013, said it will use the funds to expand its technology team at its London headquarters, and develop new tool to “offer riders flexible and well-paid work”.
A spokesman 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.”