Amazon’s investment in Deliveroo scrutinized by UK competition watchdog

A food delivery cycle courier waits for orders from Deliveroo, operated by Roofoods, in London, U.K., on Dec. 22, 2016.

Simon Dawson | Bloomberg | Getty Images

The U.K.’s competition watchdog issued an initial enforcement order Friday asking Amazon to pause its investment into food delivery start-up Deliveroo.

The Competition and Markets Authority (CMA) said it has “reasonable grounds” for suspecting Amazon and Deliveroo could “cease to be distinct,” which could give the authority grounds to block the investment.

Amazon led a $ 575 million funding round in Deliveroo in May, bringing the food delivery app’s valuation to roughly $ 1.5 billion. The investment would make Amazon a minority shareholder in the British start-up.

“We believe this minority investment will enable Deliveroo to expand its services, benefiting consumers through increased choice and creating new jobs as more restaurants gain access to the service,” an Amazon spokesperson said in a statement Friday.

Amazon’s entrance into Britain’s food delivery space set up a heated competition with Uber Eats. While Amazon does not currently operate its own food delivery business, the e-commerce giant had previously attempted to enter the U.K. market with its Amazon Restaurants takeout and delivery service.

A Deliveroo spokesperson said in a statement the companies had been working closely with regulators to obtain required approvals.

“There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition. This investment will help create jobs, help restaurants to grow their businesses and will improve choice for consumers,” the Deliveroo spokesperson said.

— Reuters contributed to this report

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