Two of the UK’s largest online food ordering platforms (Just Eat and Hungryhouse) are facing an in-depth Phase 2 investigation by the Competition and Markets Authority (CMA).
In December 2016, Just Eat announced its intention to acquire Hungryhouse for upwards of £200 million, consolidating two of the UK’s largest online food ordering and delivery platforms.
In March 2017, the CMA launched its inquiry into the acquisition and, as a result, on 10 May 2017 the CMA announced that the acquisition “may be expected to result in a substantial lessening of competition within [the takeway food delivery market] in the UK“.
As such, the CMA announced that the enquiry would move to Phase 2, unless the parties could offer undertakings to address these concerns by 17 May 2017. They declined to do so and on 19 May 2017 the CMA issued its decision to move to Phase 2.
Areas of concern
The CMA rejected arguments from Just Eat and Hungryhouse that the merger would not result in a loss of competition due to the recent proliferation of other food delivery services such as Deliveroo and Uber Eats. The CMA noted that these platforms offered delivery services from traditional restaurants, which did not otherwise offer delivery. Just Eat and Hungryhouse, on the other hand, mainly provided a platform through which restaurants which already have their own delivery service can receive orders online. As such, the CMA felt the two markets were sufficiently different so as not to be in competition.
Instead, looking at the takeway food delivery market, the CMA raised concerns that the merger of the two largest platforms in this sector could result in a significant reduction in competition, and so higher costs to the restaurants that pay to use the service.
The CMA’s Phase 2 investigation will now proceed, with the final decision being made by an independent group of CMA panel members. That final decision will be made by 2 November 2017.