Just Eat's £200m bid to take over rival Hungryhouse faces in-depth competition investigation

The CMA fears that the combination of the two companies could mean worse terms for the restaurants

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The Independent Online

Just Eat’s proposed £200m takeover of its rival Hungryhouse has been referred for an in-depth investigation by the Competition and Markets Authority (CMA).

The company was given the chance to address the concerns of the competition’s watchdog earlier this month, but failed to do so, the CMA said. A phase 2 investigation will now begin and the CMA will have until 2 November to make a decision.

Both companies provide online takeaway ordering services giving restaurants the opportunity to reach a wide pool of consumers. However, the CMA is worried the acquisition could lead to “worse terms for restaurants using either company”.

Andrew White, CEO of mobile and online pre-ordering technology company, Preoday said the CMA is right to be worried about the merger. "Such a monopoly would mean the company has the freedom to charge ever higher commission rates – now up to 14 per cent.

"So many restaurants feel Just Eat is the only way they can be successful and profitable when taking online and mobile orders, that they will feel pressured to pay whatever fee Just Eat forces upon them."

Earlier this month, investors were left unimpressed with the company’s performance with shares in Just Eat falling by up to 5.5 per cent in morning trade in London on worries that the firms order growth in the UK is slowing.

In the UK, orders rose by just 17 per cent in the first three months of 2017. That’s the lowest rate of annual growth in the UK since the company went public in 2014. 

The takeaway delivery company is also experiencing management upheaval. Chief executive David Buttress was forced to step down in February due to "urgent family matters". John Hughes, the group’s chairman who had been standing in for Mr Buttress, in April took a leave of absence for medical reasons.

The company in early May kept its guidance for full-year revenues unchanged of between £480m and £495m, and underlying earnings of between £157m and £163m.