Just Eat’s takeover of rival Hungryhouse has been provisionally cleared as the competition watchdog said new entrants like Uber were shaking up the online takeaway delivery sector.
The Competition and Markets Authority (CMA) said that despite earlier concerns over how the tie-up could curb competition, it felt that “on balance, it is unlikely to result in competition concerns”.
An independent panel investigating the deal – worth up to £240 million – found that Hungryhouse is little competition to Just Eat as it is far smaller and offers too few unique restaurants.
The CMA said this would make it hard for Hungryhouse to attract and retain customers and added that newer, bigger rivals posed more of a threat.
It said: “The industry is evolving rapidly following the entry of platforms, such as Deliveroo, UberEATS and Amazon, which also manage or facilitate delivery services on behalf of restaurants.
“These companies generally present a greater competitive challenge to Just Eat than Hungryhouse, and this is likely to grow as they expand.”
The CMA said the panel probing the deal also took into account the fact that customers could order directly from takeaway restaurants.
Just Eat shares jumped more than 5% after the announcement.
Martin Cave, inquiry chairman at the CMA, said: “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 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.”
Just Eat welcomed the announcement: “We look forward to continuing to deploy our technology and expertise to help more independent restaurants develop and grow their businesses, while offering an even better service to consumers.
“We will continue to work with the CMA ahead of its publication of a final decision.”
The CMA is seeking views on its provisional findings before making a final decision.
The deadline for responses is on November 2.
Just Eat and Hungryhouse offer online takeaway ordering services which allow restaurants to offer customers the convenience of choosing from a large range of providers in one place.
Just Eat agreed to pay £200 million to Delivery Hero for Hungryhouse and will shell out another £40 million, depending on performance.
The deal came as part of a spree by Just Eat as it looks to expand, with the group also announcing the acquisition of Canadian firm SkipTheDishes alongside the Hungryhouse takeover.