Amazon’s attempt purchase a stake in the delivery giant Deliveroo is being investigated by competition authorities who forcibly placed the deal on hold in July.
The Competition and Markets Authority (CMA) announced today that it has officially launched a Phase One investigation into the deal.
Should officials determine during this phase that the deal would significantly reduce competition in the takeaway delivery sector, a second in-depth Phase 2 investigation will follow in December.
In May the ecommerce giant led a $575 million (£450 million) funding round for Deliveroo which saw it acquire an undisclosed minority stake in the business.
Then in July the CMA issued an initial enforcement order regarding the purchase, forcing the two companies in question to remain independent of one another until the it determines whether to launch a formal investigation into the tie-up.
Despite the CMA’s decision to launch an investigation, Amazon denies the deal will reduce competition or raise prices for consumers.
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”.