UK regulators have ordered Amazon to pause its investment in UK food delivery startup Deliveroo while they consider whether the deal amounts to a takeover.
The Competition and Markets Authority said Friday that it has “reasonable grounds” to suspect that the companies may cease to be distinct if the deal moves forward.
The regulator directed the companies to stop any integration of technology and services while it considers whether to launch a full investigation. No staffing changes or employee transfers will be allowed.
Deliveroo, which is based in London, is a top UK restaurant delivery service and is expanding globally. Amazon led a $575 million investment in the startupin May, and has since signaled that the company could become a key part of its food delivery ambitions.
In a statement Friday, Amazon defended its investment. Deliveroo said both companies had been working together to obtain necessary regulatory approvals.
“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,” Amazon said.
The food delivery sector is dominated by companies including GrubHub and Uber Eats. Amazon wants in, but the e-commerce giant has struggled to gain traction.
The company said last month it would shutter its Amazon Restaurants service in the United States.
Food and groceries have been a growing focus for Amazon since its $13.7 billion purchase of grocery chain Whole Foods in 2017.
Amazon Prime members in the United States can now get groceries delivered from Whole Foods. It also delivers groceries through AmazonFresh, which costs an additional $14.99 per month for Prime members.
