Loss of potential competition through a minority stake? Takeaways from Amazon/Deliveroo

Abstract

On 4 August 2020, after a Phase 2 investigation, the Competition and Markets Authority cleared Amazon's proposed minority investment in Deliveroo. The CMA's original concern had been that the investment could damage competition by discouraging Amazon from re-entering restaurant food delivery in the UK and altering its competitive incentives in respect of online delivery of ‘convenience’ groceries. However, the CMA concluded that whilst it was likely that, absent the transaction, Amazon would have re-entered, it was not sufficiently likely that the transaction would have had a material impact on Amazon's incentives to re-enter or its approach following re-entry. Therefore, the transaction would not have resulted in a substantial reduction in potential competition. This article provides some background on the case and analyses the competitive effect of minority shareholdings between potential (as opposed to existing) competitors and discusses some broader factors in the assessment of potential competition concerns.