Deliveroo co-founder and CEO Will Shu. image: Deliveroo

The U.K.’s competition watchdog has provisionally cleared U.S.-based e-commerce giant Amazon’s investment in U.K. food delivery startup Deliveroo, citing potential financial hardships Deliveroo could face without the investment. The U.K.’s Competition and Markets Authority (CMA) previously opposed an Amazon investment in Deliveroo on concerns that such an investment could harm competition in the U.K.’s food delivery market. The approval is provisional, meaning it’s subject to further confirmation and could later be overturned.

The investment in concern is a $575 million round that Amazon reached a deal to lead in May of last year. Other investors including T. Rowe Price, Fidelity, and Greenoaks were to participate in the investment. Amid the coronavirus outbreak which has led to vast restaurant closures, Deliveroo’s business has undoubtedly taken a hit, compounding financial hassles for the company which has long been in growth mode and, in turn, operated at a loss.

“Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market,” Stuart McIntosh, the Chair of the CMA’s independent inquiry group, stated in an official press statement. “This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality. Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo.”

The CMA is seeking views on its provisional approval before it takes a final decision, which is due on the 11th of June of this year. If Amazon’s investment in Deliveroo is permanently cleared, the funding would boost the total amount raised by Deliveroo since its inception to $1.53 billion. Such would make the food delivery company one of the top-most funded startups in the U.K. and Europe at large.