The Competition and Markets Authority (CMA), which has the power to block deals if it believes consumers will have less choice, says the tie-up raises ‘serious concerns’.
Amazon led a £450m funding round in Deliveroo in May, though its exact investment was not disclosed.
Under the current deal Amazon would be able to participate in management of the company, though it would not have full control of the business.
But the CMA believes this could damage competition in the online restaurant delivery market by discouraging Amazon from re-launching its own service in the UK. The company shut down its London meal courier service, Amazon Restaurants, in 2018 after less than two years.
The CMA is also concerned about the impact on the emerging convenience grocery delivery market in the UK, as both companies are major players in the space.
“Millions of people in the UK use online food platforms for takeaways, and more than ever are making use of similar services for the same-day delivery of groceries,” says Andrea Gomes da Silva, executive director of the CMA.
“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.
“If the deal were to proceed in its current form, there’s a real risk that it could leave customers, restaurants and grocers facing higher prices and lower quality services as these markets develop."
An Amazon spokesperson told BigHospitality the investment would lead to 'more pro-consumer innovation' by allowing Deliveroo to develop new products and create jobs, adding: "A homegrown UK business like Deliveroo should have broad access to investors and supporters."
The companies have five working days to offer legally-binding proposals to the CMA to address the concerns.
The CMA would then have a further five working days to consider the offer.
BigHospitality has contacted Deliveroo for further comment.
