The UK’s Competition and Markets Authority (CMA) provisionally approved Amazon’s investment in Deliveroo over the weekend after Deliveroo warned its business could collapse without the funds. The third-party delivery service cited the COVID-19 pandemic, which has forced many restaurants worldwide to close, as the reason for “significant decline in revenues,” according to a statement from the CMA.
Deliveroo announced a $575 million Series G funding round in May of 2019 — of which Amazon was set to be the largest investor. In July of that year, the CMA put Amazon’s involvement under scrutiny, saying there were “reasonable grounds” the two companies would “cease to be distinct” with the investment.
As I wrote in December, when the investigation entered Phase 2:
As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat.
The ongoing pandemic coupled with the restaurant industry fallout has changed that. Many of the restaurants Deliveroo previously worked with have closed. That includes major QSR chains like McDonald’s and Burger King, have stopped all operations including delivery and takeout, in the UK.
In its announcement, the CMA said “it has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo’s business” and has “provisionally concluded that Deliveroo’s exit from the market would be inevitable without access to significant additional funding, which the CMA considers that only Amazon would be willing and able to provide at this time.”
The CMA is currently taking views on its findings until May 11 2020, and has until June 11 2020 to make a final decision.