Amazon and Deliveroo brand the CMA’s investigation as seriously misguided

Amazon and Deliveroo have slammed the Competition and Markets Authority’s (CMA) probe into their proposed tie-up, hoping to “persuade the CMA of the facts”.

Deliveroo is understood to have told major investors that a joint submission will be privately to the CMA accusing the watchdog of seriously misunderstanding the UK’s food delivery market, Sky News reported.

The CMA shocked investors in December, announcing that it believed the tie-up posed “a real risk” to competition as it would prevent “the significant competition which could otherwise exist between Amazon and Deliveroo”.

According to the pair the CMA’s conclusion, which has led it to launch an in-depth phase 2 investigation putting the tie-up on hold until at least June, is seriously misguided.

READ MORE: Deliveroo in “position of weakness” as investors fear for its future

They argue that Amazon has no intention of returning to the food delivery market in the UK, meaning it would not be a competitor regardless of whether its investment in Deliveroo goes ahead.

The submission, expected to be made public this week, also points out that the CMA failed to recognise the stark differences in the pair’s business models.

While Deliveroo’s competitors are takeaway delivery services like Uber Eats and Just Eat, Amazon focuses more on grocery delivery, meaning it competes with big supermarkets like Sainsbury’s and Tesco.

Furthermore, the pair have strongly dismissed the CMA’s suggestions that the undisclosed investment in Deliveroo would grant Amazon “material influence” over the company.

While Amazon’s minority stake in Deliveroo would earn it a place on the company’s board, it would not have any more rights than any other board member or shareholder.

READ MORE: Amazon offers Deliveroo “significant” loan as CMA probe continues

“We are confident that we will persuade the CMA of the facts that this minority investment will add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers,” Deliveroo told Sky News.

“Deliveroo is a British company operating right across the country and this investment will be particularly beneficial to the UK economy.”

Amazon added that it “believes that this investment funding will lead to more pro-consumer innovation by helping Deliveroo continue to build its world-class service and remain competitive in the restaurant food delivery space by creating more highly skilled jobs, innovating in the restaurant food delivery sector, and developing new products for customers.”

In response, the CMA said: “Our initial investigation found UK consumers could be negatively affected if the deal went ahead, as Amazon could be discouraged from re-entering a market in which there are only a small number of companies that act as the middleman between restaurants and customers, and that it could also damage competition in the emerging market for online convenience grocery delivery.”

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