The UK’s competition watchdog has granted preliminary approval to Just Eat’s proposed takeover of Hungryhouse, highlighting how the emergence of new services offered by the likes of Uber had reduced their initial concerns about the transaction.
It comes after the Competition and Markets Authority (CMA) launched an investigation into the deal in May, following concerns that restaurants using the service could be forced to enter into inadequate contracts.
Headquartered in London, Just Eat announced its intention to acquire Hungryhouse – a UK-based platform owned by German firm Delivery Hero – in December last year. It was revealed that Just Eat was looking to pay £200m to buy the rivaling firm and was willing to spend an additional £40m if the company met its performance targets.
In the summary of provisional findings, published by the CMA today, a group of independent panel members tasked with investigating the transaction found that, on balance, the deal was unlikely to result in competition concerns.
“The group found that Hungryhouse presently provides limited competition to Just Eat because it is much smaller in size and offers too few unique restaurants, making it increasingly difficult for Hungryhouse to attract and retain customers,” reads the statement.
Additionally, the probe deemed that the industry was evolving rapidly following the entry of platforms such as Deliveroo, UberEATS and Amazon.
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“These companies generally present a greater competitive challenge to Just Eat than Hungryhouse, and this is likely to grow as they expand,” the statement adds.
Martin Cave, inquiry chair, commented on the findings: “We carefully assessed competition in this rapidly evolving industry to make sure this merger would not result in increased prices or reduced quality of offering for either restaurants or their customers. We obtained evidence from all the major industry participants and carried out surveys, with the public and restaurants, to understand how the merger could impact both types of customers.
“We found that Hungryhouse was a weak competitor to Just Eat and so competition is unlikely to be substantially reduced by this merger, especially given the entry and rapid expansion of innovative suppliers in this sector,” Cave concluded.
The CMA is now asking for views on these provisional findings and will assess all the evidence before making a final decision.