Just Eat, and as an extension, Hungryhouse, has been caught in the midst of an ‘in-depth’ investigation pivoted around the firm’s ability to adequately respond to concerns over competition.
Last year in December, London-based JustEat made the announcement of its intention to acquire Hungryhouse, a UK-based platform owned by German firm Delivery Hero. At the time, Just Eat professed its desire to take over the rivaling firm for £200 million, and also said it would spend an additional £40 million given that the company hit its performance targets.
However, according to a statement by the Competition and Markets Authority (CMA) – a non-ministerial government department in the UK charged with strengthening business competition and preventing and decreasing anti-competitive activities – its initial investigation into the merger had found “that the companies are close competitors because of the similarities of their service and their broad geographical coverage”.
The CMA also said that other firms operating in food delivery space such as Deliveroo, UberEATS and Amazon Restaurants, symbolized less direct competition to the companies, since the type of restaurants they target are different. They added the fact that these firms also provide less extensive geographic coverage than Just Eat and Hungryhouse, saying:
The CMA is therefore concerned that the loss of competition resulting from the Just Eat/Hungryhouse merger may result in worse terms for restaurants using either of the two companies.
Due to the launch of the CMA’s initial inquiry, the merger is now in the process of being referred for an in-depth phase two investigation by an independent group of CMA panel members, a measure that can only be avoided if JustEat is able to respond to the department’s concerns by 17th May. JustEat commented in a statement:
Just Eat notes the CMA’s decision that it intends to refer its review of Just Eat’s proposed acquisition of Hungryhouse to a “Phase 2” investigation. 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. In the meantime, Just Eat will continue to operate its business as usual.