Fresh off the heels of a bidding war for the acquisition of UK-based delivery service Just Eat, Takeaway.com, who also offers on-demand restaurant food delivery, faces a new opponent: British regulators.
The Competition and Markets Authority (CMA) said late last week that it is investigating the proposed Takeaway.com-Just Eat Merger to see whether the deal, worth £6 billion (~$8 million USD), would “result in a substantial lessening of competition” in the UK food delivery market, according to The Associated Press.
Specifically, the CMA is looking into whether Takeaway.com would have re-entered the UK market, which the service left in 2016, without the Just Eat deal.
This isn’t the first time the CMA has brought the hammer down on a major deal between two food delivery companies. In May of 2019, Amazon announced a major investment in Deliveroo, only to have it flagged by the Authority, who said it “presented reasonable grounds” that such a deal would make the two companies “cease to be distinct” from one another. In other words, the deal would undercut competition from other food delivery services in the UK, including Just Eat.
The Amazon-Deliveroo investigation is still ongoing, and at last check the deal was said to be in serious jeopardy.
For Takeaway.com and Just Eat, the situation seems a little less dire, at least for now. Takeaway.com said the deal would still go through but be delayed by one week. Takeaway.com said it was confident that clearance on the merger “will be obtained.”
Takeaway.com first announced its intentions to acquire Just Eat in July 2019 in an all-share deal that would create a new company, Just Eat-Takeaway.com. The company then found itself in the middle of a bidding war with Naspers-backed tech investment firm Prosus, who over the last several months has offered multiple counter bids for Just Eat.
While that bidding war was put to bed recently, it, along with this latest investigation from the CMA, underscores how fiercely competitive the food delivery market is getting, and just how thick in the middle of a consolidation process it is. With demand for off-premises orders set to drive restaurant sales for the next decade and investors applying pressure for these companies to show the third-party delivery model can be profitable, companies across the space are shutting down services, selling their operations, and, at least in the case of the big guys, gobbling up the smaller players.
For its part, Takeaway.com said it was confident that clearance on the merger “will be obtained.” Now we’ll have to wait and see if that really does mean a simple one-week delay or if the two companies have a longer, more complicated battle on the horizon.