U.K. Orders Pause in Amazon Delivery Deal -- WSJ

By Parmy Olson and Adria Calatayud 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 6, 2019).

Britain's competition regulator is reviewing Amazon.com Inc.'s investment in U.K. food-delivery startup Deliveroo, as the expansion of Silicon Valley giants heightens antitrust concerns in markets around the globe.

The U.K. Competition and Markets Authority said Friday it had served an initial enforcement order for the Amazon-Deliveroo deal, preventing the companies from integrating their operations while the CMA considers launching a formal investigation.

The CMA, without specifying any antitrust issues, said it was examining the deal because it believed the two companies had either "ceased to be distinct" or had made plans to that effect. Initial enforcement orders are intended in part to keep deal partners from taking action that might impede the competition regulator from ordering remedies.

Deliveroo said in May that Amazon would lead a $575 million funding round in which the U.S. tech giant would become one of its biggest investors.

A person close to Deliveroo expressed surprise at the CMA's decision and said it was unclear how the regulator had determined that the two companies were merging parts of their operations.

"There's no operations to merge," the person said. "There's not going to be any integration of the depth they're suggesting."

Amazon closed its own restaurant-delivery service in the U.K. late last year. It said it would shut a similar service in the U.S. in June.

A spokesman for the CMA declined to comment beyond the enforcement notice.

The U.K. has been aggressive in scrutinizing Silicon Valley firms, considering, for example, the establishment of a new regulator to look at a wide spectrum of online content. Meanwhile, the European Commission is pressing antitrust action against Alphabet Inc.'s Google and other tech firms.

Amazon is also facing increased government scrutiny in the U.S., which could slow what has been a steady stream of acquisitions by the e-commerce giant, The Wall Street Journal has reported. The Seattle-based company has spent more than $20 billion on acquisitions and investments since the start of 2017, including its $13.7 billion purchase of grocery chain Whole Foods.

Nicole Kar, an antitrust lawyer with Linklaters in London, said Britain's antitrust regulator has been looking closely at investments by tech behemoths in smaller rivals, in what are sometimes called "killer acquisitions."

Ms. Kar expects the CMA to investigate whether Amazon's investment in Deliveroo would allow it to curb the startup's plans for grocery delivery to its own advantage. Amazon has a grocery-delivery partnership in the U.K. with local supermarket chain Wm Morrison Supermarkets PLC, and Deliveroo has teamed up with the Co-operative Group Ltd., a rival grocer, she said.

An Amazon spokesman said its investment would enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs.

A spokesman for Deliveroo said the two companies had been working closely with regulators to obtain regulatory approvals and noted there were a number of other major companies in the food-delivery market.

Deliveroo, whose delivery bikes are almost as common a sight on the streets of London as the city's black cabs and double-decker buses, competes with Uber Technologies Inc.'s Uber Eats and other services in the U.K.

The service, which generates revenue by charging restaurants a commission and customers a flat fee on each order, launched in London in 2013. It doesn't have a presence in the U.S. but operates in various countries across Europe, Asia-Pacific and the Middle East.

(END) Dow Jones Newswires

July 06, 2019 02:47 ET (06:47 GMT)

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