Amazon has received approval from the UK’s competition regulator to acquire a 16% stake in on-demand food delivery company Deliveroo.
The Competition and Markets Authority (CMA) found that consumers would not lose out through a substantial lessening of competition in either restaurant delivery or convenience grocery delivery. However, if Amazon were to increase its shareholding in Deliveroo from 16% it would review the deal again.
The CMA examined internal documents, a consumer survey and third-party submissions to reach its verdict.
The Covid-19 pandemic has seen Deliveroo switch towards smaller, independent restaurants and away from large fast food chains. It has also signed partnerships with supermarkets such as Morrisons and Marks & Spencer to deliver convenience groceries, as well as Holland & Barrett and Lloyds Pharmacy.
The move comes as Amazon plans a major expansion of its UK grocery ambitions, recently announcing the launch in the country of its Amazon Fresh same-day online grocery business. It is also planning to set up 30 of its Amazon Go checkout-free physical stores across the country.
Selling through Deliveroo as a channel offers customers a quick and convenient way to access a product range.
However, the on-demand courier is a fairly expensive way of delivering groceries in relative terms. Holding a stake in the Deliveroo may hedge Amazon against damage to its bottom line if a substantial number of orders come through that channel.