Just Eat-Takeaway raises doubts over Deliveroo's CMA evidence
Last month, the CMA provisionally approved the investment following evidence, provided by Deliveroo, that the delivery giant would otherwise collapse, concluding that Deliveroo’s exit from the market would be worse for competition than allowing the Amazon investment to proceed.
As part of its response to the merger, JETA has expressed strong concerns over the clearance, raising issue with both Deliveroo’s initial evidence and the CMA’s Phase Two review.
Assessing Deliveroo’s initial evidence, JETA has said that whilst the aggregator may have lost part of its supply due to the coronavirus crisis, it also gained 3,000 new restaurants in the first few weeks, which “should have generously compensated the loss of other restaurants.”
“This triggers JETA to question whether the decline in the financial position of Deliveroo was actually due to COVID-19 or because of the quality of its business model and decision-making relating to its pricing,” it said.
In response to Deliveroo’s claims that “no other source of funding was available” but the Amazon investment, JETA pointed to the initial Series G funding round – led by Amazon – in which alternative funding options were made available.
“Deliveroo would have succeeded in raising some alternative funds given the interest that investors had shown in the opportunity and the attractiveness of Deliveroo as an investment opportunity at that time,” it said. “It was ultimately the decision of Deliveroo not to progress with those alternative options.”
“Deliveroo chose not to pursue other funding options. This should not allow a ‘free pass’ to now state that Amazon is the only viable investment option.”
On the current state of the market, JETA said that “there are still different routes available to businesses to generate cash despite and during the COVID-19 crisis and many companies in the UK and worldwide have been successful in doing so.”
“JETA respectfully asks the CMA to reconsider its provisional decision. Alternatively, should it continue along its path to a clearance decision, the CMA must, at the very least, recognize the need for conditions to be placed on the clearance given the strong position of Amazon in the UK and the material influence it will be able to exercise over Deliveroo.”
Before finalising its decision on the deal, the CMA has said it will assess all submitted views on its provisional findings ahead of its final report on 11 June.
