Business regulators ordered Amazon Friday to stop investing in British food distributor Deliveroo due to “reasonable grounds” the integration amounts to a takeover.
Amazon invested $575 million in London-based Deliveroo in May and has indicated the startup could become a key part of its food delivery plans. Britain’s Competition and Markets Authority, however, said it suspects there would be no distinction between the two companies if the investment continues, which would violate competition rules.
Amazon’s investment pushed Deliveroo’s value to about $4 billion and had a destabilizing impact on European competitors, like Germany-based Delivery Hero and Dutch startup Takeaway.
Regulators ordered no further integration, staffing changes or employee transfers until they decide the matter. There’s no deadline for the CMA to decide whether to opt for a formal investigation.
Amazon said Friday its partnership with Deliveroo is no takeover.
“We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service,” it said.
Deliveroo said both companies are working through the regulatory process.
Amazon has unsuccessfully tried to launch its own food delivery service in Britain, with Amazon Restaurants UK, but closed the service in December after two years of operation. In the United States, Amazon bought Whole Foods in 2017 to deliver groceries, and Amazon Prime members in some U.S., British, Japanese and German areas can order food through AmazonFresh.
Founded in 2013, Deliveroo serves 14 nations and areas — including Britain, France, Hong Kong, Australia, Italy and Germany.