CMA puts brakes on Amazon’s Deliveroo investment

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UK’s competitions watchdog is set to examine Amazon’s investment in Deliveroo, it has announced, putting the brakes on the multi-million pound deal.

The internet retail giant took a stake in Deliveroo in May, leading a $575m (£450m) funding round. It did not reveal the exact size of the stake.

However, now the Competitions and Market Authority has has served an initial enforcement order on the deal.

It means Amazon and Deliveroo can continue talks, but cannot merge until they get the thumbs up from the regulator.

The CMA will now examine whether to open a full investigation into the deal. If it eventually has regulatory concerns, it may ask Amazon to sell part of its business before green-lighting the deal.

Amazon, a giant in delivery, had hoped Deliveroo would give it a foothold in the food delivery market, where it has failed to compete. The Amazon Restaurants concept closed last month.

Although it is famed for offering one-day delivery to customers across the UK, the firm often outsources the final mile.

Therefore its infrastructure has not been set up for food deliveries, which need rapid and local execution, experts have said.

Deliveroo, for its part, has said it will use the retail giant’s cash to invest in its London-based technology team. It will also expand to reach new customers.

“This new investment will help Deliveroo to grow and to offer customers even more choice, tailored to their personal tastes, offer restaurants greater opportunities to grow and expand their businesses, and to create more flexible, well-paid work for riders,” founder Will Shu said in May.