Amazon rivals push UK's CMA to reverse decision on Deliveroo acquisition

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The U.K.’s reliance upon the devastating impact of the Covid-19 pandemic to approve Inc.’s investment in Deliveroo came under scrutiny from rivals, who called for the merger regulator to reverse itself.

The Competition and Markets Authority failed to properly consider other potential lifelines for Deliveroo when provisionally clearing Amazon’s investment in the food-delivery startup, Domino’s Pizza Group Plc said in a filing released Thursday. The CMA, which has until later this month to issue its final assessment, had said that Deliveroo risked going out of business as restaurants shut amid the outbreak.

“There was at least one alternative funding source that would have likely yielded a similar amount and on similar terms,” Domino’s said. The CMA “declined to investigate and gather evidence,” acting in a way that was an “abdication” of its duties, the franchiser said.

The CMA said last month it was prepared to approve the minority investment by the U.S. company after finding that the possible exit of Deliveroo would be worse for competition than allowing the deal to proceed. It’s an argument that even the CMA itself has said recently is a difficult one to make.

The CMA had said that any other investment would have been insufficient to see Deliveroo through the crisis, but Domino’s said the regulator ignored the possibility of any further support.

Amazon shuttered its Amazon Restaurants delivery unit in 2018. The CMA had originally warned that the purchase could hurt competition by discouraging the U.S. company from re-entering the market through another deal.

In its own response to the provisional findings, Amazon said the deal wouldn’t hurt competition even in the absence of the pandemic. The minority investment only gives it one board seat out of eight and its shareholding will be “similar in size” to other Deliveroo investors, the firm said.

A spokesman for the CMA didn’t immediately comment.

In a statement, Amazon said it’s committed to the deal, saying the investment will help small businesses. Deliveroo said the funds would help it improve service and do its part to boost the U.K. economy.

Bloomberg News