(Reuters) – Britain’s competition regulator has stepped in to pause Amazon’s (AMZN.O) deal with online food delivery group Deliveroo while it considers launching a full investigation.
Amazon led a $575 million fundraising in Deliveroo in May, making what the two parties called “a minority investment” and going up against Uber Eats (UBER.N) in the global race to dominate the market for takeaway meal deliveries.
On Friday Britain’s Competition and Markets Authority (CMA) said it served an initial enforcement order (IEO) on the two companies on June 24, signaling possible concerns about the transaction.
The regulator, which referred to Amazon’s investment as “a minority shareholding” said it had reasonable grounds for suspecting that Amazon and Deliveroo “have ceased to be distinct” or were putting in place or considering arrangements which would result in them “ceasing to be distinct”.
The order requires Amazon and Deliveroo to operate independently for now, meaning they cannot press ahead with the tie-up. It gives the regulator time to decide if it will launch a formal “Phase 1” competition probe.
The Deliveroo investment is Amazon’s latest attempt to enter the takeaway delivery market, worth around $100 billion globally, after it shut down its own service, Amazon Restaurants, first in the UK and then last month in the United States.
Deliveroo said it and Amazon had been working closely with regulators to obtain their approval. The two companies will argue that the investment will help Deliveroo grow its coverage, increase competition and boost the restaurant sector.
“We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service,” Amazon said in a statement.
Deliveroo noted that…