The eCommerce giant Amazon has been granted permission to purchase a minority stake in the U.K-based food delivery start-up Deliveroo. The firm was able to convince regulators that the deal would not be detrimental to competition.

In May of last year, Deliveroo officially confirmed that it had raised a $575 million fund round led by Amazon. Two months later, the U.K. Competition and Markets Authority (CMA) put a stop on the contract. Later, the CMA launched a formal study to examine potential anti-competitive implications.

One of the key concerns eras of the CMA was the potential of the agreement to prevent the e-commerce giant from re-entering into the online food restaurant market. Amazon previously operated an online takeout strategy, called Amazon Restaurants, but then left the market last year.

On Tuesday, the regulators released a final investment statement and gave the green single to Amazon to buy a minority stake, i.e., 16% stakes in Deliveroo. Two previous provisional findings that the deal should be accepted have been supported by this move.

At the beginning of this year, Amazon and Deliveroo had been given initial clearance because Deliveroo was financially struggling without the cash due to the outbreak of the coronavirus. 

Following a rebound in the market for food supplies, the regulators then concentrated on how the deal would impede competition in restaurants and online food supplies. The CMA agreed with this interpretation, describing Deliveroo's withdrawal from the market as a failing company and finding that competition would have worsened, thereby clearing Amazon's stake provisionally in April.

The decision to approve the offer was followed by a thorough review of Amazon and Deliveroo's internal records, an inquiry of more than 3,000 customers, and a wide variety of submissions from third parties concerned.

Source Credit - https://www.cnbc.com/2020/08/04/amazon-gets-approval-to-buy-stake-in-uk-food-delivery-firm-deliveroo.html