Amazon, Deliveroo Play Down Competition Fears After Regulator's Alarm -- Update

--The U.K.'s Competition and Markets Authority said Amazon's investment in Deliveroo raises serious competition concerns

--The regulator gave the companies five working days to offer remedies to address its concerns

--Amazon said Deliveroo should have broad access to investors and the U.K. startup said it will continue to work with the CMA

 
   By Ian Walker and Adria Calatayud 
 

Amazon.com Inc. (AMZN) has defended its investment in food-delivery platform Deliveroo, after the U.K.'s Competition and Markets Authority said it raises serious competition concerns.

The CMA said Wednesday that the investment could damage competition in online food delivery as Amazon moves into the U.K. market. It also believes the deal could damage competition for online convenience grocery delivery.

In May, Deliveroo raised $575 million in a funding round led by Amazon, in which the U.S. tech giant became one of the biggest investors in the London-based startup. The CMA launched a formal probe into Amazon's investment in October.

"There are relatively few players in these markets, so we're concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses," CMA Executive Director Andrea Gomes da Silva said.

The U.K. regulator's warning comes as the food-delivery industry moves toward consolidation. Takeaway.com NV (TKWY.AE) and Prosus NV (PRX.AE) are currently battling to take over another U.K. food-delivery platform, Just Eat PLC (JE.LN), valued at over $6 billion. Last December, Takeway.com paid over $1 billion for the German operations of European rival Delivery Hero AG (DHER.FF).

Amazon and Deliveroo now have five working days to offer legally-binding proposals to address the CMA's concerns, otherwise the regulator may refer the deal for a further investigation.

Amazon said it believes its investment will lead to more pro-consumer innovation by helping Deliveroo remain competitive in the restaurant-delivery market and developing new products for customers.

"A homegrown U.K. business like Deliveroo should have broad access to investors and supporters," an Amazon spokesperson said.

Deliveroo said it has been working closely with the CMA and will continue to do so.

"We are confident that we will persuade the CMA of the facts that this minority investment will add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers," a spokesperson for Deliveroo said.

Write to Ian Walker at [e-mail] and to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

December 11, 2019 08:26 ET (13:26 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.