Amazon.com Inc.’s proposed investment in food delivery firm Deliveroo got a green light from the U.K.’s merger watchdog, which said it was likely to clear the transaction.
The coronavirus outbreak is hurting Deliveroo’s business, the Competition and Markets Authority said Friday as it released its provisional findings on the deal. Under the normal timeline, the CMA would hold discussions with the companies early next month before issuing its final report in late May, a year after the proposal was announced.
“Deliveroo recently informed the CMA that the impact of the coronavirus pandemic on its business meant that it would fail financially and exit the market without the Amazon investment,” the regulator said.
The decision moves Amazon closer to regaining a presence in the U.K. Food delivery market as the lead in the $575 million investment. The CMA warned that the purchase could hurt competition by discouraging the American company starting its own operation from scratch.
It shuttered its Amazon Restaurants delivery unit in 2018.
The CMA stunned investors in June by starting an in-depth probe into the transaction with Deliveroo. The deal doesn’t include a controlling stake, prompting warnings from investors and startup groups that the regulator’s intervention risked starving firms of capital at the very moment they need it most.
The regulator, which has been taking a tougher line on deals by the largest technology firms, has been seeking concessions from Amazon to get approval. Bloomberg reported in March that the CMA wanted Amazon to relinquish a board seat or lower the size of its stake in Deliveroo.
The regulator has been considering how hard of a line to take against the companies, whose employees have been designated as critical workers by the government and act as a potential lifeline to vulnerable people amid the coronavirus pandemic.
Even before instigating a formal second-phase probe, the CMA was interviewing Amazon’s senior management. That came after the regulator found internal documents indicating that the U.S. Company had also considered other plans to re-enter the British market through the purchase of another platform.
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