Amazon’s tie up with Deliveroo is expected to be provisionally approved for a second time by the UK competition watchdog this week, though under different terms.
The Competition and Markets Authority (CMA) is expected to provisionally green light the deal, which would see Amazon take a 16 per cent stake in Deliveroo, in the coming days according to Sky News.
The CMA had already given its provisional approval for the deal to go ahead in April, but has now adjusted its reasoning following major criticisms from industry rivals including Just Eat Takeaway and Domino’s Pizza.
According to sources speaking to Sky News, the CMA believes that Amazon would not receive superior voting rights on Deliveroo’s board, and there would therefore be no competition concerns.
Most importantly, the CMA said that it no longer believed its previous rational that Deliveroo was a failing firm and would disappear without Amazon’s investment was valid.
In April the CMA said the £400 million investment had been provisionally cleared after the food delivery firm said it would go bust without the cash it needs from the online retail giant.
It said that due to the coronavirus lockdown Deliveroo had suffered heavily after several major restaurant chains, including Nandos, KFC and Pret a Manger, closed their doors to all customers.
“While securing additional funding from other sources may have been possible before the coronavirus outbreak, the pandemic has severely limited the availability of finance for early stage businesses such as Deliveroo,” the CMA said, adding that “only Amazon would be willing and able to provide (the money) at this time”.
This decision was slammed by the now market leader Just Eat Takeaway for using “incorrect or misleading data”, adding that it was based on an “extremely narrow” period not representative of the company’s financial health.
Its final decision on the deal is set for August 6 after being delayed by two months, and could yet change again.