A Deliveroo worker cycles along a pedestrianised road in Liverpool, Britain. Picture: REUTERS/PHIL NOBLE
A Deliveroo worker cycles along a pedestrianised road in Liverpool, Britain. Picture: REUTERS/PHIL NOBLE

Geneva — The UK competition regulator has started a review into Amazon.com’s bid to buy a slice of fast-growing food delivery start-up Deliveroo, adding to the e-tailing company’s antitrust woes around the globe.

The Competition and Markets Authority said it is investigating the purchase of rights and a minority shareholding in Roofoods, which does business under the Deliveroo brand. The first phase will wrap up by December 11, it said.

The investigation comes after the regulator said in July it had “reasonable grounds” to believe Amazon and Deliveroo, which operates a fleet of smartphone-navigated scooters and bicycles to deliver food from local restaurants, had either ceased to be separate operations or were close to merging. While Competition and Markets Authority reviews into mergers are common, it is unusual for the regulator to examine acquisitions of minority stakes.

A spokesperson for Amazon declined to comment, while a representative for Deliveroo did not immediately return a message inquiring about the review.

US Democratic presidential contender Elizabeth Warren on Tuesday called out Amazon for running an online marketplace and competing with third-party sellers on the platform as the EU’s competition tsar investigates whether the company is shortchanging smaller merchants in that dual role. Amazon also faces separate antitrust scrutiny from the US Federal Trade Commission and justice department.

Cash injection

In May, Amazon said it would invest in a $575m funding round to help the London-based start-up expand its technology team and network after closing down its own food delivery business in the capital in 2018. UK food delivery has become fiercely competitive, and Deliveroo’s rivals include Just Eat and Uber Technologies.

That rivalry has driven acquisition talk across the industry. Just Eat and Takeaway.com agreed in July to a £5bn ($6.4bn) combination, less than six months after Takeaway.com spent about $1bn for the German operations of rival Delivery Hero. Spanish food delivery start-up Glovo has also drawn preliminary interest from Uber and Deliveroo in recent months, people familiar with the matter said previously.

Deliveroo said in October that while global sales from its food-delivery business had increased 72% in 2018, profitability remained elusive. The company said it lost £232m in 2018 compared to £199m a year earlier.

Amazon has signalled its growing ambitions in the UK grocery market with Prime Now, which delivers in British cities within two hours. It faces stiff domestic competition from Ocado Group, an online grocery pioneer that licenses its technology to Kroger and aims to halve the Prime Now delivery time with a service called Zoom.

Bloomberg 

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