Fresh From Interviewing Amazon, U.K. Plans Tougher M&A Probes

(Bloomberg) --

Fresh from interviewing Amazon.com Inc. executives over their plans for the U.K.'s online delivery market, the country's merger watchdog is hunting for more tools to boost scrutiny of M&A by the tech giants.

The Competition and Markets Authority is examining whether deals involving “particularly powerful companies” should automatically fall under a new investigatory procedure, Andrea Coscelli, the regulator's chief executive officer, announced this week.

It's all part of renewed efforts to roll back the dominance of the largest tech firms and comes as the U.K.'s departure from the European Union allows the CMA to devise new approaches to antitrust concerns.

While such a system would require legislative changes, it could mean new tests including putting distinct burdens of proof on the companies to show that competition wouldn't be harmed in order to get clearance for a deal, Andrea Gomes da Silva, the CMA's executive director for mergers, added in a separate interview on Tuesday.

European and U.S. regulators are grappling with ways to tackle digital monopolies and have flagged concerns on big-tech dealmaking that might eat up potential rivals or deter investment for promising startups. But the CMA is the first to propose that the deals by the tech giants be treated differently. Executives in the U.K. authority have said repeatedly that past acquisitions including Facebook's purchase of Instagram in 2012 would never be approved today.

Shocked Investors

The proposal comes after the CMA shocked investors by starting an in-depth probe of Amazon's planned investment in delivery startup Deliveroo. The deal doesn't -- at least immediately -- include a controlling stake, prompting warnings from investors and startup groups, that the regulator's intervention risks starving firms of capital at the very moment they need it most.

“The recent actions of the CMA reflect an ignorant one-size-fits-all approach to tech acquisitions, investment and mergers that can only damage the tech ecosystem in the U.K.,” the Coalition for a Digital Economy said in a letter dated Feb. 28 to the new Chancellor of the Exchequer Rishi Sunak.

Even before launching a formal second-phase probe, the CMA was interviewing Amazon's senior management. That came after the regulator found internal documents indicating that the U.S. company had also considered other plans to re-enter the British market beyond the investment in Deliveroo.

An Amazon spokesman in the U.K. declined to immediately comment.

As part of its scrutiny of alternative outcomes, the regulator has also been looking at deal valuations of some of the startups, Gomes da Silva said.

“In some digital acquisitions we see deal valuations which are at least at first blush quite out of kilter with other benchmarks,” she said.

To contact the reporter on this story: Jonathan Browning in London at jbrowning9@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman, Molly Schuetz

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