U.K. Orders Pause in Amazon Delivery Deal -- WSJ
July 06 2019 - 3:02AM
Dow Jones News
By Parmy Olson and Adria Calatayud
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 6, 2019).
Britain's competition regulator is reviewing Amazon.com Inc.'s
investment in U.K. food-delivery startup Deliveroo, as the
expansion of Silicon Valley giants heightens antitrust concerns in
markets around the globe.
The U.K. Competition and Markets Authority said Friday it had
served an initial enforcement order for the Amazon-Deliveroo deal,
preventing the companies from integrating their operations while
the CMA considers launching a formal investigation.
The CMA, without specifying any antitrust issues, said it was
examining the deal because it believed the two companies had either
"ceased to be distinct" or had made plans to that effect. Initial
enforcement orders are intended in part to keep deal partners from
taking action that might impede the competition regulator from
ordering remedies.
Deliveroo said in May that Amazon would lead a $575 million
funding round in which the U.S. tech giant would become one of its
biggest investors.
A person close to Deliveroo expressed surprise at the CMA's
decision and said it was unclear how the regulator had determined
that the two companies were merging parts of their operations.
"There's no operations to merge," the person said. "There's not
going to be any integration of the depth they're suggesting."
Amazon closed its own restaurant-delivery service in the U.K.
late last year. It said it would shut a similar service in the U.S.
in June.
A spokesman for the CMA declined to comment beyond the
enforcement notice.
The U.K. has been aggressive in scrutinizing Silicon Valley
firms, considering, for example, the establishment of a new
regulator to look at a wide spectrum of online content. Meanwhile,
the European Commission is pressing antitrust action against
Alphabet Inc.'s Google and other tech firms.
Amazon is also facing increased government scrutiny in the U.S.,
which could slow what has been a steady stream of acquisitions by
the e-commerce giant, The Wall Street Journal has reported. The
Seattle-based company has spent more than $20 billion on
acquisitions and investments since the start of 2017, including its
$13.7 billion purchase of grocery chain Whole Foods.
Nicole Kar, an antitrust lawyer with Linklaters in London, said
Britain's antitrust regulator has been looking closely at
investments by tech behemoths in smaller rivals, in what are
sometimes called "killer acquisitions."
Ms. Kar expects the CMA to investigate whether Amazon's
investment in Deliveroo would allow it to curb the startup's plans
for grocery delivery to its own advantage. Amazon has a
grocery-delivery partnership in the U.K. with local supermarket
chain Wm Morrison Supermarkets PLC, and Deliveroo has teamed up
with the Co-operative Group Ltd., a rival grocer, she said.
An Amazon spokesman said its investment would enable Deliveroo
to expand its services, benefiting consumers through increased
choice and creating new jobs.
A spokesman for Deliveroo said the two companies had been
working closely with regulators to obtain regulatory approvals and
noted there were a number of other major companies in the
food-delivery market.
Deliveroo, whose delivery bikes are almost as common a sight on
the streets of London as the city's black cabs and double-decker
buses, competes with Uber Technologies Inc.'s Uber Eats and other
services in the U.K.
The service, which generates revenue by charging restaurants a
commission and customers a flat fee on each order, launched in
London in 2013. It doesn't have a presence in the U.S. but operates
in various countries across Europe, Asia-Pacific and the Middle
East.
(END) Dow Jones Newswires
July 06, 2019 02:47 ET (06:47 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Amazon.com (NASDAQ:AMZN)
Historical Stock Chart
From Apr 2024 to May 2024
Amazon.com (NASDAQ:AMZN)
Historical Stock Chart
From May 2023 to May 2024