The Competition and Markets Authority (CMA), which has the power to block deals if it believes consumers will have less choice, announced today (5 July) it has issued an Initial Enforcement Order.
This means the two companies must remain independent while it decides whether to launch a formal investigation.
The CMA says it has “reasonable grounds for suspecting” that Amazon and Deliveroo have “ceased to be distinct” or that “arrangements are in progress or in contemplation” that would make them so.
Until a decision is made neither company can take any action which could “lead to the integration of the Deliveroo business with the Amazon business”, including staff or branding changes.
Amazon led a £450m funding round in Deliveroo in May, though its exact investment was not disclosed.
There was speculation the tech giant was using Deliveroo to mount a challenge to rivals such as Uber, after Amazon shut down its own UK food delivery platform Amazon Restaurants in 2018 after less than two years.
A spokesperson for Deliveroo says: “Deliveroo and Amazon have been working closely with regulators to obtain regulatory approvals. There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition. This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers.”
Earlier this year the CMA put a stop to the merger between supermarket chains Sainsbury’s and Asda as it found the tie-up could result in higher prices and a reduced quality of products for shoppers.
Deliveroo was founded in London in 2013 and now operates in over 500 towns and cities worldwide.