01353 72 20 20 vr@vrobinson.co.uk
The CMA has made it clear that its substantive assessment of merger clearance applications will not change as a result of the coronavirus crisis. However, while still in line with this approach, the impact of the crisis has led to the CMA’s first provisional decision to clear a merger based on the “failing firm defence.” On 27 December 2019, the CMA referred the acquisition by Amazon of a minority stake in Deliveroo for an in-depth Phase 2 review. It had concerns that the transaction may be expected to result in a substantial lessening of potential competition, on the basis that Amazon would be discouraged from independently re-entering the online restaurant food market and from further developing its position within the online convenience grocery delivery market in the UK. Deliveroo subsequently presented evidence, including from its financial advisers, that persuaded the CMA that Deliveroo’s exit from the market would be inevitable without access to significant additional funding, which only Amazon would be willing and able to provide at this time. The CMA accepted that the imminent exit of Deliveroo would be worse for competition than allowing the Amazon investment to proceed. Although securing additional funding from other sources may have been possible before the COVID-19 outbreak, the CMA agreed that the pandemic has severely limited the availability of finance for businesses. The case is also of interest in that the CMA has claimed jurisdiction to review the merger even though Amazon is acquiring only a 10-16% shareholding and certain accompanying rights, including board representation. Third parties have until 11 May 2020 to provide their views to the CMA on its provisional findings. The CMA has until 11 June 2020 to reach its final decision.