The UK Competition Authority provisionally clears the acquisition of a delivering food company despite COVID-19 (Deliveroo / Amazon)

On 17 April 2020, approximately one week after the CMA found COVID-19 not to be an obstacle to its decision to block the Sabre/ Farelogix transaction, the CMA announced its provisional clearance of the acquisition by Amazon of a minority shareholding and certain rights in Deliveroo “in light of a deterioration in Deliveroo’s financial position as a result of coronavirus”.

On 27 December 2019, the CMA referred the deal to a Phase II review due to concerns that it could lead to a substantial lessening of competition in the market for online restaurant platforms and/or the market for online convenience groceries. However, in light of the substantial changes to the market brought about by the pandemic and the consequent negative impact on Deliveroo’s business (for example, due to substantial restaurant closures), the CMA reconsidered its position.

Specifically, the CMA assessed whether COVID-19’s impact on Deliveroo had created an “exiting firm scenario” enabling Deliveroo to avail itself of the “failing firm” defence. The CMA applied a three-stage test, considering: (1) whether Deliveroo would have left the market absent the transaction; (2) whether there was a substantially less anti-competitive investor/purchaser available than Amazon; and (3) what would happen in the event that Deliveroo exited the market (in other words, how would this impact competition and consumers).

The CMA found that Deliveroo’s exit from the market would have been “inevitable without access to significant additional funding”. It also considered that only Amazon appeared willing and able to provide the investment that would be required as the COVID- 19 pandemic had “severely limited” financing available for “early-stage businesses” like Deliveroo. Furthermore, the CMA predicted that allowing Deliveroo to exit the market would lead to a reduction in quality (in terms of price and service) of the offerings of the remaining online restaurant platforms, Just Eat and Uber Eats.

The CMA’s decision is not yet final. There is now a three-week consultation period on the provisional findings with the statutory deadline for the CMA’s final report falling on 11 June 2020.

The CMA has been particularly active in the market for online restaurant platforms in recent weeks. On 23 April 2020, the CMA gave the green light to Just Eat’s merger with after finding that there was no material likelihood of re-entering the UK market absent the transaction.

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  • Van Bael & Bellis (Brussels)


Porter Elliott, The UK Competition Authority provisionally clears the acquisition of a delivering food company despite COVID-19 (Deliveroo / Amazon), 17 April 2020, e-Competitions April 2020, Art. N° 94695

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