Amazon's Deliveroo Investment Attracts Formal U.K. Probe -- 5th Update
October 16 2019 - 1:11PM
Dow Jones News
By Parmy Olson and Daniel Michaels
Britain's antitrust watchdog has launched a formal probe into
Amazon.com Inc.'s investment into Deliveroo, a British
food-delivery startup, marking the official start of a relatively
novel review that regulators signaled earlier this month.
The regulator could block the deal if it finds the companies
have breached antitrust rules.
The probe is the latest in Europe amid a flurry of regulatory
moves -- and heightened scrutiny -- targeting technology companies.
The European Union has in the past few years taken the lead in
investigating a handful of mostly American tech giants, such as
Google parent Alphabet Inc., Facebook Inc. and Amazon, as they grew
to dominate markets from online search and ads to e-commerce. More
recently, the rest of the world has piled in, too, including the
launch of a handful of probes in Washington, targeting Google and
Facebook, in particular.
Europe, meanwhile, has increasingly turned to a set of rarely
used tools to further its own scrutiny. On Wednesday, the EU's
antitrust regulator ordered chip maker Broadcom Inc. to stop
requiring certain contract terms that the regulators deemed
anticompetitive. It took the rare step of issuing an injunction
ordering Broadcom to stop the practice, even as its probe
continues. It was the first use of this tool in 18 years.
The EU said it needed to halt the practice immediately, to
prevent market damage, even if it has yet to finish its probe and
make specific findings. Broadcom said it will appeal the decision
but abide by the injunction.
In the U.K., British authorities moved forward Wednesday with
their own unusual probe of Amazon. In July, the country's
Competition and Markets Authority said it was reviewing a deal by
Amazon to invest in Deliveroo, whose food-delivery motorbikes and
bicycles are a common sight on the streets of many British cities.
The company offers quick delivery of restaurant meals, charging
restaurants a commission and customers a flat fee on each
order.
Amazon led a $575 million fundraising round into Deliveroo in
May. The CMA required the two companies to hold off on consummating
the deal until it decided whether to launch a formal probe. On
Wednesday, the agency said it was moving ahead. It will decide by
Dec. 11 whether to move the deal to the next phase of the probe, or
let it go ahead.
The CMA, without specifying any antitrust issues, has 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.
Legal experts say the CMA has been looking at big tech investments
in startups to determine whether they are essentially targeted
toward blunting budding competitors.
One particular issue the CMA might be concerned with is 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.
Amazon declined to comment. In the past, Amazon has said its
investment in Deliveroo would help the startup expand its service,
benefiting consumers through increased choice and creating jobs.
Deliveroo said it was cooperating with the CMA. "This minority
investment will help to create jobs, help restaurants to grow their
businesses, improve choice for consumers and enhance competition in
the U.K. food-delivery sector," a Deliveroo spokesman added.
If the regulator rules against the deal going forward, it would
give Amazon and Deliveroo the opportunity to remedy any competition
issues by, for instance, selling off a part of their business, a
CMA spokeswoman said.
Write to Parmy Olson at parmy.olson@wsj.com and Daniel Michaels
at daniel.michaels@wsj.com
(END) Dow Jones Newswires
October 16, 2019 12:56 ET (16:56 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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