Deliveroo, Amazon blast CMA's ‘speculative' probe into merger deal
They denied being competitors in the online grocery delivery segment.
Amazon and Deliveroo have responded to the Competitions and Market Authority’s (CMA) initial probe into their US$575m (£470m) merger deal, arguing that it was “speculative” and “not supported by evidence.”
The competition watchdog recently released its decision on the first phase of its investigation, underscoring two areas of possible lessening of market competition: online restaurant platforms and online convenience grocery delivery.
It alleged Amazon’s re-entry into the highly concentrated online restaurant platform segment in the UK and that both tech giants would become closer competitors in the online convenience grocery delivery scene.
“The CMA’s Phase 1 decision does not produce any credible evidence of existing competition between Amazon and Deliveroo. [It] largely focusses on notional loss of potential future competition. But these theories of harm are speculative and not supported by evidence,” the two firms said in a joint response.
Both companies denied Amazon’s re-entry into the UK market after it had exited the local online food delivery scene in 2018.
With regards to grocery delivery, they said that the CMA failed “to recognise important differences in Amazon’s and Deliveroo’s respective models,” and that they are not actual competitors in the space.
Deliveroo uses a point-to-point delivery model for its grocery ordering services based on riders, whilst Amazon uses a batched point-to-multipoint model for its car or van-based grocery delivery service.
Moreover, the companies dismissed the claim that the deal could have material influence over Deliveroo shareholders and board directors as it was only a “minority” investment, with the US-based firm entitled to appoint only one board director to the UK-based company.
The CMA’s full decision on the merger investigation is expected to be released on 11 June.
