Amazon's investment in Deliveroo faces competition inquiry

The competition watchdog is investigating Amazon's investment in Deliveroo - a move that marked the online giant's renewed interest in the UK food delivery market.

The Competition and Markets Authority said it served a Phase 1 enforcement order on Amazon and Roofoods, which trades as Deliveroo.

The CMA said it suspected the companies had "ceased to be distinct" and that they should not integrate operations without the CMA's permission. While the investigation is taking place Deliveroo and Amazon should remain separate and compete independently in markets affected by the investment, the CMA said.

Amazon was the lead investor in a $575m (£457m) fundraising in Deliveroo in May, suggesting it was ready to take on Uber Eats and other delivery businesses.

Amazon closed its own UK delivery service after two years in December 2018. Its investment in Deliveroo sent the shares of rival Just Eat down heavily when it was announced. The investment has faced political opposition, including from Tom Watson, Labour's deputy leader. Watson said Amazon wanted to get hold of Deliveroo's data.

The CMA served its initial enforcement order on 24 June and granted certain exclusions on 2 July. It opened the inquiry on 5 July. The regulator did not give a deadline for its Phase 1 decision.

Under the chairmanship of former MP Andrew Tyrie the CMA has taken a harder line on deals that it thinks will harm consumers, including quashing Sainsbury's attempted purchase of Asda.

Deliveroo said it and Amazon were working with regulators to gain their approval for the investment and that there was plenty of competition in the delivery market.

"This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers," Deliveroo told Reuters.