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Revised Provisional Findings Report Anticipated acquisition by Amazon of a minority shareholding and certain rights in Deliveroo Revised provisional findings report Notified: 22 June 2020 © Crown copyright 2020 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. The Competition and Markets Authority has excluded from this published version of the revised provisional findings report information which the inquiry group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by []. Some numbers have been replaced by a range. These are shown in square brackets. Non-sensitive wording is also indicated in square brackets. Contents Page Summary .................................................................................................................... 4 Exiting Firm Counterfactual ............................................................................. 7 Restaurants counterfactual .............................................................................. 9 Conclusion on re-entry by Amazon in the counterfactual .............................. 15 Groceries counterfactual ............................................................................... 15 Supply of online restaurants platforms in the UK ................................................ 16 Amazon relying on Deliveroo for its presence in online restaurant platforms 17 Amazon competing less aggressively in online restaurant platforms ............. 18 Amazon discouraging Deliveroo from competing against Amazon in online restaurant platforms ...................................................................................... 19 Provisional conclusion on supply of online restaurant platforms in the UK .... 20 Supply of OCG in the UK .................................................................................... 20 Amazon discouraging Deliveroo from competing against Amazon in OCG ... 21 Amazon competing less aggressively in OCG services ................................. 22 Amazon relying on Deliveroo for its presence in OCG .................................. 23 Additional theories of harm ................................................................................. 25 Revised provisional findings ..................................................................................... 27 1. The reference ..................................................................................................... 27 2. Coronavirus (COVID-19) outbreak ...................................................................... 29 Effect of the Coronavirus (COVID-19) outbreak on the UK economy ................. 30 Effect of the Coronavirus (COVID-19) outbreak on the restaurant sector ........... 30 Effect of Coronavirus (COVID-19) in March 2020 .......................................... 30 Effect of Coronavirus (COVID-19) from mid-April 2020 ................................. 31 Effect of the Coronavirus (COVID-19) outbreak on grocery sector ..................... 32 Longer-term effect of Coronavirus (COVID-19) .................................................. 33 3. Market definition.................................................................................................. 33 Approach ............................................................................................................ 33 Online restaurant platforms ................................................................................. 34 Introduction and overview .............................................................................. 34 Restaurant platform models........................................................................... 35 Product market definition ............................................................................... 36 Geographic market definition ......................................................................... 54 Online convenience groceries ............................................................................. 58 Introduction and overview .............................................................................. 58 Product market definition ............................................................................... 60 Geographic market definition ......................................................................... 78 4. Counterfactual..................................................................................................... 80 Legal framework ................................................................................................. 80 Counterfactual for online convenience groceries ........................................... 82 Deliveroo counterfactual ..................................................................................... 82 Overview of exiting firm counterfactual .......................................................... 82 Summary of April Provisional Findings analysis ............................................ 83 Initial impact of Coronavirus (COVID-19) on Deliveroo ................................. 83 Impact of Coronavirus (COVID-19) on the April Provisional Findings counterfactual ............................................................................................... 85 Developments since the April Provisional Findings ....................................... 86 Impact of developments on Deliveroo ........................................................... 88 Parties’ submissions ...................................................................................... 90 1 Third party submissions ................................................................................. 91 CMA assessment of the Deliveroo counterfactual ......................................... 93 Limb 1: Would Deliveroo have exited absent the Transaction? ..................... 93 Conclusion on the application of ‘Limb 1’ of the exiting firm analysis ............ 97 Limb 2: Is there a substantially less anti-competitive investor or purchaser for Deliveroo’s assets? ...................................................................................... 98 Amazon counterfactual ..................................................................................... 100 Parties’ submissions .................................................................................... 102 CMA Assessment: Amazon’s incentives and intention to re-enter ............... 102 CMA Assessment: Amazon’s ability to re-enter ........................................... 125 Conclusion on re-entry by Amazon counterfactual ...................................... 135 5. Supply of online restaurants platforms in the UK .............................................. 136 Framework ........................................................................................................ 137 Parties’ submissions ......................................................................................... 137 Would Amazon re-enter? .................................................................................. 138 Theories of harm ............................................................................................... 139 Impact of the Transaction on whether Amazon would re-enter ................... 141 Impact of the Transaction on the nature of Amazon’s entry ........................ 148 Impact of Amazon’s re-entry ............................................................................. 152 Provisional conclusion on supply of online restaurant platforms in the UK ....... 154 6. Supply of online convenience grocery services in the UK ................................. 154 Introduction ....................................................................................................... 154 Background ....................................................................................................... 156 The groceries industry ................................................................................. 156 How OCG services are supplied .................................................................. 159 Closeness of competition .................................................................................. 163 The Parties’ current OCG businesses ......................................................... 163 Substitutability of the Parties’ OCG propositions ......................................... 168 The Parties’ ambitions in groceries .............................................................. 177 The Parties’ plans to supply OCG ............................................................... 178 Competition in OCG .......................................................................................... 181 Online grocery providers ............................................................................. 182 Online restaurant delivery marketplaces ..................................................... 184 Convenience store providers ....................................................................... 186 Traditional grocery stores ............................................................................ 187 Expansion and development of competitive offers ...................................... 188 Future
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