December 27, 2019 / 11:30 AM / 6 months ago

UPDATE 2-Amazon's Deliveroo deal faces in-depth UK competition probe

* CMA moves investigation to "Phase 2"

* Initial probe found deal could hurt competition

* Both companies continue to back the deal (Recasts, adds Amazon's response, context)

By Pushkala Aripaka

Dec 27 (Reuters) - Britain's competition regulator is launching an in-depth investigation into Inc's purchase of a stake in online food delivery group Deliveroo after the companies failed to assuage its initial concerns.

Amazon led a $575 million fundraising by Deliveroo in May and the probe could disrupt the e-commerce giant's efforts to compete with Uber Eats, Just Eat and in food delivery.

The Competition and Markets Authority (CMA), which launched an initial probe in June, said on Friday it had decided to move to a "Phase 2" investigation as Amazon and Deliveroo had not addressed its concerns before a Dec. 18 deadline.

Earlier this month, the CMA said Amazon's investment into Deliveroo in its current form could harm competition in restaurant food delivery and online convenience grocery delivery.

The deal would give Amazon more say in the running of Deliveroo, which has grown rapidly in the last six years to more than 100 towns and cities across Britain.

Neither Deliveroo nor Amazon have not disclosed Amazon's stake in the company.

Seattle-based Amazon defended the deal on Friday, saying Deliveroo should have broader access to investors.

Deliveroo said it was working with the CMA and the deal would "add to competition, helping restaurants to grow their businesses, creating more work for riders and increasing choice for customers".

The CMA in April blocked supermarket group Sainsbury's 7.3 billion pound ($9.6 billion) agreed takeover of Walmart-owned rival Asda.

$1 = 0.7640 pounds Reporting by Pushkala Aripaka in Bengaluru; Editing by Arun Koyyur and Mark Potter

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