Jeff Bezos might get to throw his wealth into the food delivery ring once again, after the Competition and Markets Authority (CMA) made a U-turn on a U-turn and provisionally approved a £442 million investment that would earn him a 16 percent stake in loss-making restaurant delivery juggernaut Deliveroo.
This investment has been in the works for over a year. The CMA initially blocked it, in order to an open an investigation into how it would affect competition in the restaurant delivery sector. Then, in April 2020, the CMA made its first surprising U-turn, provisionally approving the investment after receiving evidence that Deliveroo would “exit the market” — collapse — without immediate funding; funding that could only, apparently, come from Amazon.
That decision centred on the novel coronavirus pandemic’s impact on restaurants, cited as “the closure of a large number of the key restaurants available through Deliveroo, and a significant decline in revenues.” Deliveroo, however, also reported that over 3,000 restaurants had signed up since the outbreak in March, which, according to figures cited in that CMA decision, would represent around 10 percent of its global restaurant network.
Now, in U-turn two, the CMA says that Deliveroo’s “firm failure” defence is entirely inadmissible, but it will still, provisionally, approve Amazon’s investment, on the grounds that it will not significantly lessen delivery competition. In the intervening months between U-turns, Just Eat finalised an £8.1 billion merger with Dutch company Takeaway and then beat Uber to a deal with U.S. delivery juggernaut Grubhub, setting itself up for a straight fight with Deliveroo.
A Deliveroo spokesperson focussed on Deliveroo’s British credentials when reflecting on American company Amazon’s investment: “This minority investment is good news for UK customers and restaurants, and for the British economy. As we have argued for the past year, since the beginning of the CMA’s investigation, the minority investment will enable British born, British bred Deliveroo to compete against well-capitalised overseas rivals and continue to innovate for customers, riders and restaurants. As the British economy recovers from the damage caused by Covid 19, a stable regulatory environment is critical. We therefore urge the CMA to conclude their review as swiftly as possible.”
This remains a provisional approval, with a final decision due in early August.