Deliveroo’s £400 million cash injection from Amazon has been slammed by Domino’s Pizza, stating it has “serious concerns” about its impact on competition.
Last month the Competition and Markets Authority (CMA) gave provisional approval for Amazon’s investment in the delivery giant after it said it would go bust without the cash it needs from the online retail giant.
However, the pizza chain has strongly criticised the CMA’s decision in a 33-page submission, highlighting concerns about the “negative impact on competition, and ultimately on consumers, of Amazon’s investment in Deliveroo”.
Domino’s, which unlike its rivals Papa Johns and Pizza Hut does not feature on Deliveroo’s app, said it disagreed with the CMA’s reasoning that Deliveroo could collapse without the investment.
It questioned why emergency funding couldn’t be raised by any of Deliveroo’s other investors, and said the company was a “strong brand with good medium to long-term prospects but for COVID-19 – in other words, it may lack short term liquidity”.
“If the PFs (provisional findings) were to become final the CMA would, in Domino’s view, have failed in its statutory duty to protect competition and consumers in the UK,” the submission stated.
“The fact that this gaping hole in the CMA’s logic has not been investigated is a dereliction of its duties.
“By taking a short-term view unduly influenced by Covid-19 and without proper interrogation of the counterfactual, the CMA provisionally intends to permit Amazon to extend its ecosystem dominance into food delivery, quite apart from foreclosing its own incentives to enter Deliveroo’s market.”
Similar submissions were also made by two smaller businesses and two anonymous accounts, which highlighted the question over whether funding could be found elsewhere.
When the deal was provisionally approved by the CMA on April 18, Deliveroo said: “We are delighted the CMA has found that Amazon can invest in Deliveroo.
“This investment is a key part of Deliveroo’s plan to provide an even better service to customers, riders and restaurants, and, as we’re a British company, this will be a boost to the UK economy.
“The unprecedented health crisis we all face has disrupted businesses across the country.”