The UK’s competition watchdog has cleared a merger deal potentially worth £6 billion between the food delivery platforms Just Eat and Takeaway.com.
Last January the CMA started an investigation into the proposed merger of the UK’s Just Eat and Takeway.com, which is based in the Netherlands, but operates in 11 countries. Takeaway.com does not have an active presence within the UK market following a cessation of its service in 2016.
The CMA’s main concern was that (without the merger) Takeway.com would be able to re-enter the market in future creating — something that would offer increased choice for UK consumers, which it is keen to support.
Today, however, has ruled that upon viewing both enterprise’s internal business documents there is no likelihood that Takeaway.com would look to re-enter the UK market and as such has cleared the merger.
Colin Raftery senior director of mergers at the CMA commented: “After interrogating how this deal is likely to affect the UK market, we are satisfied that there are no competition concerns.”
“In this case, we carefully considered whether Takeaway.com could have re-entered the UK market in future, giving people more choice. It was important we investigated this properly, but after gathering additional evidence which indicates this deal will not reduce competition, it is also the right decision to now clear the merger.”
Amazon and Deliveroo
The CMA also recently cleared a major investment by Amazon in Deliveroo, a rival enterprise of Just Eat and Takeway.com
Deliveroo was founded in the UK in 2013 and has quickly become a highly recognisable food delivery brand with global sales of close to £500 million.
In May of 2019 Amazon was the lead investor in a $575 (£465) million Deliveroo funding round which resulted in Amazon obtaining an influential 16 percent minority stake. At the time CMA executive director Andrea Gomes da Silva commented in a notice that: “There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the 2 businesses.”
However, due to the COVID-19 outbreak the CMA has reconsidered its position as the ongoing lockdown has shuttered most restaurants and reduced the number of products that Deliveroo had access to.
This has resulted in a ‘significant decline’ in the firm’s revenues. Deliveroo informed the CMA that without Amazon’s investment the delivery company would it would fail financially and exit the market.
Stuart McIntosh, Chair of the CMA’s independent inquiry group commented that: “These wholly unprecedented circumstances have meant reassessing the focus of this investigation, reacting quickly to the impact of the coronavirus and deciding what it would mean for the businesses involved in this transaction and, in turn, for customers.
“Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market.”
“Faced with that stark outcome, we feel the best course of action is to provisionally clear Amazon’s investment in Deliveroo.”
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