Under the deal, Amazon will acquire 16% of Deliveroo as the lead investor in a $575m (£438m) funding, which was first announced last year.
At that point the CMA concluded that there was a “realistic prospect”’ that the transaction could harm competition by, for example, discouraging Amazon from re-entering the online restaurant food market or further developing its presence in the online convenience grocery delivery market in the UK.
The CMA said, after reviewing Deliveroo’s finances from April 2020 onwards, it became apparent that the restaurant food delivery market had recovered much more “sharply than had been expected “and that the restaurant ‘mix’ had also shifted towards smaller, independent restaurants and away from large fast food chains, several of which closed or stopped offering home delivery, due to the coronavirus pandemic.
Its final decision to clear the deal on competition grounds is the culmination of extensive analysis of internal documents from Amazon and Deliveroo, a survey of more than 3,000 consumers, and extensive submissions from interested third parties.
Stuart McIntosh, inquiry chair, said: “Today’s final decision is the result of a thorough examination of this deal and the markets in which Amazon and Deliveroo operate.
“The CMA’s initial Phase 1 review of the transaction highlighted potential competition concerns which the independent Inquiry Group has considered in detail during the Phase 2 investigation.”
He added: “Taking account of the higher legal standard that applies at Phase 2, the Group has concluded that the transaction will not result in a substantial lessening of competition in either restaurant delivery or convenience grocery delivery. Our decision reflects the scale of Amazon’s investment in Deliveroo (16% of the company’s equity) and its incentives to compete in both markets.
“When looking at any merger, the CMA’s role is to assess whether consumers will lose out from a substantial lessening of competition. We have not found this to be the case given the scale of Amazon’s current investment, but if it were to increase its shareholding in Deliveroo, that could trigger a further investigation by the CMA.”