Online takeaway ordering firm Just Eat is to face a full-blown investigation into its takeover of rival Hungryhouse amid concerns the deal could curb competition.
The Competition and Markets Authority said its initial probe into the acquisition – worth up to £240 million – found the two firms were close competitors because of the service they offer and their reach across the UK.
On Friday the watchdog said the merger could lead to worse terms for restaurants using either company, adding that the deal will now undergo an in-depth merger investigation after Just Eat failed to address its concerns.
The group announced its takeover of Hungryhouse last December.
The watchdog said, “Both companies provide online takeaway-ordering services. These give restaurants the opportunity to reach a wide pool of people, as well as offer customers the convenience of choosing from a large range of takeaway providers in one place.
“Following its initial investigation into the merger, the CMA has found that the companies are close competitors because of the similarity of their service and their broad geographical coverage.”
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 an acquisition spree by Just Eat as it looks to expand, with the group also announcing the acquisition of Canadian firm Skip the Dishes alongside the Hungryhouse takeover.