Food fight: UK regulator probes's takeover of Just Eat

(Reuters) - Britain’s competition watchdog will probe’s buyout of Just Eat, possibly delaying completion of the multi-billion dollar deal to create one of the world’s largest meal delivery companies.

FILE PHOTO: Signage for Just Eat is seen on the window of a restaurant in London, Britain, August 5, 2019. REUTERS/Toby Melville/File Photo

The investigation is a blow for the online food ordering company after it fought a prolonged battle with rival Prosus NV to buy Just Eat, the market leader in UK food delivery.

The UK’s Competition and Markets Authority (CMA) changed its position on the deal and now believes a probe may be warranted, Takeaway said on Thursday, adding that the regulator would be looking into whether it would have re-entered the UK market without the current deal in place.

A CMA spokeswoman confirmed it would open an investigation but gave no further details.

Takeaway said it pulled out of the loss-making UK market in 2016 after struggling with stiff competition. That year, the business lost 768,000 pounds ($1.01 million) and made revenues of just 76,000 pounds.

“ confirms that it did not have the intention to re-enter the UK market absent the transaction with Just Eat,” the Dutch company said, adding it would respond to the CMA’s questions and that it was confident of getting a green light.

Earlier this month, Just Eat’s shareholders agreed to the all-stock deal valued at 6.2 billion pounds over a rival bid from tech investment giant Prosus NV.

Just Eat and Prosus did not immediately respond to a request for a comment.

Takeaway has said the combination will achieve annual cost savings of about 20 million euros ($22.2 million) from centralizing orders on its platform, unifying brands and improving purchasing.

The probe comes after the UK watchdog launched an in-depth investigation into Inc’s purchase of a stake in online food delivery group Deliveroo last month after the companies failed to assuage its initial concerns.

Reporting by Pushkala Aripaka and Samantha Machado in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Josephine Mason