The U.K.’s antitrust watchdog today granted Amazon.com Inc. provisional approval to buy a stake in Roofoods Ltd., better known as Deliveroo Inc., a London-based food delivery startup valued at more than $2 billion as of 2017.

Deliveroo announced last March that it had raised a $575 million funding round led by Amazon with participation from several investment firms. But the deal stalled in July after the U.K.’s Competition and Markets Authority launched a probe to investigate potential negative ramifications on the local food delivery market.

Specifically, the watchdog’s concerns focused on two main areas. First, CMA officials sought to determine if Amazon’s investment in Deliveroo would make it harder for smaller food delivery providers to enter the U.K. market. The watchdog also made the point that Amazon’s purchase of a stake in Deliveroo may lower the chance of the online retailer launching a rival food delivery service in Britain, a scenario that would lead to less competition overall. 

The CMA cited the coronavirus pandemic in its decision to clear the deal provisionally. The watchdog said Deliveroo has seen a significant decline in revenue as a result of restaurant closures and would “fail financially” without the cash injection from Amazon. 

“Without additional investment, which we currently think is only realistically available from Amazon, it’s clear that Deliveroo would not be able to meet its financial commitments and would have to exit the market,” Stuart McIntosh, the chair of the CMA’s independent inquiry group, elaborated in a statement. “This could mean that some customers are cut off from online food delivery altogether, with others facing higher prices or a reduction in service quality.”

“The unprecedented health crisis we all face has disrupted businesses across the country,” a Deliveroo spokesperson said in a statement. “This investment will help us to overcome immediate and long-term challenges, allow us to continue to improve our service for customers, enable us to develop new innovations and offer people even greater choice.”

Deliveroo has adjusted to the new situation by providing more grocery delivery services to consumers opting to do their shopping online. Food delivery providers in the U.S. are doing the same, with Uber Technologies Inc.’s Eats division, Postmates Inc. and other major players shifting resources from delivering restaurant orders to ferrying essential household supplies to consumers’ doorsteps. Uber last month also pledged to deliver 300,000 free meals to first responders and healthcare workers.

Photo: Deliveroo