Just Eat faces competition probe over Hungryhouse takeover
Online takeaway company Just Eat’s bid to snap up rival Hungryhouse faces an in-depth investigation by the UK competition watchdog over fears restaurants could end up with a worse deal.
The Competition and Markets Authority is investigating the potential of the proposed merger to curb competition in the takeaway food industry.
Just Eat serves more than 16 million takeaway customers and some 60,000 restaurants in more than 10 countries.
The acquisition of Hungryhouse is expected to add up to £15m to its earnings.
London-based Just Eat provides an online platform and delivery drivers for restaurants that pay for the service, in a growing sector that also includes Uber and Deliveroo.
The CMA said both Just Eat and Hungryhouse were “close competitors because of the similarity of their service and their broad geographical coverage”.
It said the likes of Deliveroo, UberEATS and Amazon Restaurants represented “less direct competition” because they “tend to target different types of restaurants”.
“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,” the watchdog said.
The proposed £200m deal now faces a second phase investigation – unless the firm can address the CMA’s competition concerns over the tie-up.
Just Eat responded by saying it was “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,” it added in a statement.
It has until 17 May to put forward proposals.
Just Eat announced it had agreed to buy UK business Hungryhouse from Berlin-based owner Delivery Hero in December – alongside the acquisition of Canadian firm SkipTheDishes.
It said earlier this month that sales rose 46% to £118.9m in the three months to 31 March, with UK orders rising 17% to 24 million.
Jefferies analyst David Reynolds said at the time that the deal removed the possibility of a merger between Hungryhouse and a rival such as Deliveroo that could have been seen as a threat to Just Eat.
Last month, Deliveroo unveiled plans to provide kitchen space for pop-up delivery restaurants.