- General
- July 5, 2019
- 5 minutes read
U.K. Regulators Pause Amazon-Deliveroo Deal
Deliveroo CEO Will Shu image: RISE on Flickr Not long ago, Deliveroo announced $575 million in Series G funding led…
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| Deliveroo CEO Will Shu
image: RISE on Flickr
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Not long ago, Deliveroo announced $575 million in Series G funding led by Amazon. The round boosted the U.K food delivery startup’s total funding to $1.53 billion. But that deal has run into scrutiny from the U.K. Competition and Markets Authority (CMA). The consumer watchdog has said it has “reasonable grounds” to suspect that Amazon and Deliveroo may cease to be distinct [if the deal goes through] or could merge in future time.
A merger of both companies would reduce customer options in the U.K. food delivery market. Amazon last year shuttered its U.K. restaurant delivery service amid heightened competition from Deliveroo. Aligning with Deliveroo appeared to be a strategy for the company to gain more ground in the U.K.
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| A Deliveroo courier hands over a McDonalds package to a customer
image: Deliveroo
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Now, the U.K. Competition and Markets Authority (CMA) has ruled that Deliveroo must operate as a distinct company with its own branding and sales and not be aligned under the Amazon brand. The CMA has also prohibited “substantive changes” to Deliveroo’s organizational structure while it decides it should open a full investigation. This entails a ban on staffing changes or employee transfers between both companies for a period.
Amazon on the other hand has defended its Deliveroo investment. “We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service,” The e-commerce giant said in a statement.
