The Competition and Markets Authority (CMA) could launch an in-depth investigation into food delivery service Just Eat‘s planned acquisition of rival Hungryhouse amid concerns that the merger threatens restaurants.
The tie-up “may result in worse terms for restaurants using either of the two companies,” the CMA said in a statement.
Shares in Just Eat fell one percent to 558p after the CMA announced its imminent investigation on Wednesday.
The CMA added that more recent entrants into the takeaway delivery market, such as Deliveroo and UberEats don’t pose direct competition to restaurants because they operate in fewer regions across the UK.
When did the investigation begin?
In December 2016, Just Eat first announced its intention to buy Hungryhouse for £200m-£240m.
It was not until March this year that the CMA announced an initial investigation into the anticipated merger.
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The CMA invited interested parties to comment on the effects of the potential merger on the competitiveness of the food and drink industry.
The regulator will refer the merger for an “in-depth phase two investigation” — unless Just Eat can “address competition concerns” before May 17.
The company insisted that it would cooperate with the CMA’s demands.
“Just Eat looks forward to cooperating with the CMA and is committed to demonstrating to the CMA that the market is, and will remain, competitive following completion of the proposed transaction,” JustEat said in a statement.
The CMA’s actions will no doubt keep Just Eat’s new senior management team occupied. The company lost its chief executive, chief financial officer and chairman in the last seven months.
Interim chief executive Paul Harrison will take the lead as the company faces a high level of scrutiny.
Just Eat boasts 18.2m online users and offers home delivery services from 71,000 takeaway restaurants.