Amazon's Food Delivery Ambitions Stymied By UK Regulatory
Zacks Investment Research | Jul 08, 2019 06:04AM ET
Amazon’s (NASDAQ:AMZN) comeback attempt into food delivery business has been brought to a halt by Britain's Competition and Markets Authority (“CMA”). The company, which led a $575 million fundraising in Deliveroo in May this year, has been ordered to operate separately from Deliveroo til a “Phase 1” competition probe is conducted on the deal. Amazon’s contribution to the fund was not revealed by either of the parties.
Amazon, however, has refuted CMA’s decision, maintaining that the deal was a “minority investment” and not an acquisition.
Deliveroo, which competes in Britain with Just Eat and Uber Technologies’ (NYSE:UBER) food delivery division Uber Eats, said that it is closely working with the regulators to obtain the necessary approvals. It believes that the deal will encourage healthy competition in the restaurant sector. The company also noted that the Amazon-led investment would boost job creation and help restaurants to expand.
Restaurant Ambitions Face Obstruction
The takeaway delivery market is estimated to be worth around $100 billion globally, and it is not surprising that Amazon is eyeing it. However, the industry seems to be jinxed for the behemoth.
The company recently pulled the plug on its own food delivery unit, Amazon Restaurants, shutting down the U.K branch in November last year and the U.S. business in June this year. Even though no reason was stated, the service had reportedly been struggling to stand against Uber Eats, Grubhub (NYSE:GRUB) , and Doordash, which, per Zacks Investment Research
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