Amazon.com Inc.’s proposed investment in food delivery firm Deliveroo got a green light from the U.K.’s merger watchdog, which said it was likely to clear the transaction.
The coronavirus outbreak is hurting Deliveroo’s business, the Competition and Markets Authority said Friday as it released its provisional findings on the deal. Under the normal timeline, the CMA would hold discussions with the companies early next month before issuing its final report in late May, a year after the proposal was announced.
“Deliveroo recently informed the CMA that the impact of the coronavirus pandemic on its business meant that it would fail financially and exit the market without the Amazon investment,” the regulator said.
The decision moves Amazon closer to regaining a presence in the U.K. food delivery market as the lead in the $575 million investment. The CMA warned that the purchase could hurt competition by discouraging the American company starting its own operation from scratch.
It shuttered its Amazon Restaurants delivery unit in 2018.
The CMA stunned investors in June by starting an in-depth probe into the transaction with Deliveroo. The deal doesn’t include a controlling stake, prompting warnings from investors and startup groups that the regulator’s intervention risked starving firms of capital at the very moment they need it most.
The regulator, which has been taking a tougher line on deals by the largest technology firms, has been seeking concessions from Amazon to get approval. Bloomberg reported in March that the CMA wanted Amazon to relinquish a board seat or lower the size of its stake in Deliveroo.
The regulator has been considering how hard of a line to take against the companies, whose employees have been designated as critical workers by the government and act as a potential lifeline to vulnerable people amid the coronavirus pandemic.
Even before instigating a formal second-phase probe, the CMA was interviewing Amazon’s senior management. That came after the regulator found internal documents indicating that the U.S. company had also considered other plans to re-enter the British market through the purchase of another platform.
More coronavirus coverage from Fortune:
—22 million lost their jobs in the past month—real unemployment rate likely near 18%
—How Fortune 500 companies are utilizing their resources and expertise during the pandemic
—Inside the surreal “Mask Economy”: Price-gouging, bidding wars, and armed guards
—The IRS just launched “Get My Payment” portal for tracking your stimulus check status
—How every sector of the S&P 500 has been impacted by the coronavirus selloff
—If you’ve been a little busy lately, here’s what’s going on with the 2020 election
—Military experts: We need to fight coronavirus like we fight insurgents on the battlefield
—PODCAST: COVID-19 might have upended the concept of the best companies of the year
—VIDEO: 401(k) withdrawal penalties waived for anyone hurt by COVID-19
Subscribe to Outbreak, a daily newsletter roundup of stories on the coronavirus pandemic and its impact on global business. It’s free to get it in your inbox.
