Letter urges antitrust enforcers to closely monitor Uber’s potential acquisition of Grubhub
WASHINGTON – U.S. Senator Amy Klobuchar (D-MN), Ranking Member of the Subcommittee on Antitrust, Competition Policy and Consumer Rights, along with Senators Patrick Leahy (D-VT), Richard Blumenthal (D-CT), and Cory Booker (D-NJ), wrote a letter to Assistant Attorney General Makan Delrahim and Federal Trade Commission (FTC) Chairman Joseph Simons, urging the Department of Justice (DOJ) and the FTC to monitor the negotiations relating to Uber’s potential acquisition of Grubhub and to initiate an investigation if the parties reach an agreement to merge.
“Online food delivery markets are still evolving and finding new ways to connect customers with restaurants. Consumers should be able to look forward to a future in which online food delivery is more efficient, more innovative, and less expensive. A merger of two of the three biggest rivals in an already concentrated market risks depriving consumers of that outcome by potentially eliminating competition between the existing market participants,” the senators wrote.
“We urge you to keep track of this potential acquisition and initiate an investigation if the parties reach a merger agreement to ensure that competition is preserved.”
In her role as Ranking Member of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, Klobuchar has championed efforts to protect consumers, promote competition, and fight consolidation in major industrial sectors, including the telecommunications, technology, agriculture, and pharmaceutical sectors.
Last week, Klobuchar raised concerns after reports emerged about Uber’s interest in acquiring Grubhub.
Earlier this month, Klobuchar, Blumenthal, Booker, Leahy, and colleagues sent a letter to Assistant Attorney General for Antitrust Makan Delrahim and FTC Chairman Joseph Simons, urging DOJ and the FTC to be vigilant in enforcing the antitrust laws and protecting consumers during and after the coronavirus (COVID-19) pandemic.
Also in May, Klobuchar, Blumenthal, and Booker called on the DOJ to monitor the live performance marketplace to ensure that small and independent venues will have the chance to compete on a level playing field once this crisis has ended
Klobuchar leads the Consolidation Prevention and Competition Promotion Act to restore the original purpose of the Clayton Antitrust Act to promote competition and protect American consumers. The bill would strengthen the current legal standard to help stop harmful consolidation that may materially lessen competition.
In March, Klobuchar introduced new legislation to deter anticompetitive abuses that distort the competitive process and harm consumers, innovation, and new business formation. The Anticompetitive Exclusionary Conduct Prevention Act prohibits anticompetitive exclusionary conduct that risks harm to the competitive process. It also makes reforms to improve antitrust enforcement across the board. The bill was cosponsored by Senators Richard Blumenthal (D-CT) and Cory Booker (D-NJ).
In August 2019, Klobuchar introduced the Monopolization Deterrence Act to crack down on monopolies that violate antitrust law. The legislation would give the DOJ and FTC the authority to seek civil penalties for monopolization offenses under the antitrust laws, a power they currently do not have. The bill is cosponsored by Senators Blumenthal, Dianne Feinstein (D-CA), and Ed Markey (D-MA).
Full text of the letter can be found HERE and below:
Dear Assistant Attorney General Delrahim and Chairman Simons:
We write to you in response to recent reports that Uber Technologies, Inc., which operates Uber Eats, is in negotiations to purchase its rival Grubhub, Inc. As our country grapples with the many health and safety challenges brought about by the coronavirus (COVID-19) pandemic, many consumers have turned to food delivery apps to order meals online, and many restaurants have come to rely on the business they get through these apps to stay afloat. A merger of Uber Eats and Grubhub would combine two of the three largest food delivery application providers and raise serious competition issues in many markets around the country. We urge the Department of Justice and the Federal Trade Commission to closely monitor the negotiations of this potential transaction and to initiate an investigation if the parties reach an agreement to merge.
Online food delivery is dominated by three providers. On a national basis, Uber Eats, Grubhub, and Doordash account for 20 percent, 28 percent, and 42 percent of online app-based food delivery sales, respectively. The merger under negotiation would create a sector in which the top two players control 90 percent of sales. At the local level, the competitive effects of the merger would be felt most intensely. For example, a combined Uber Eats/Grubhub would control 51 percent of the market in Atlanta, 68 percent in Boston, 60 percent in Chicago, 65 percent in Miami, and 79 percent in New York City. These market shares are staggering, particularly in light of the leverage that these online delivery companies already wield over restaurants, delivery workers, and consumers, especially during this pandemic.
We have been hearing about the exorbitant fees that these online delivery app companies charge to restaurants, which are then forced to pass these excessive costs on to consumers. Some cities have even taken action to cap the fees charged to restaurants by these apps, which in some cases have exceeded 30 percent of the cost of the food ordered. It is particularly troubling that this merger is being contemplated during a pandemic, when consumer demand has increased and when restaurants are more desperate for revenue than ever.
Even after COVID-19 is behind us, combining Uber Eats and Grubhub would create an effective duopoly that would likely threaten competition and consumer welfare. That could mean higher fees, reduced services quality, fewer choices, and less innovation for consumers and the restaurants that serve them.
Online food delivery markets are still evolving and finding new ways to connect customers with restaurants. Consumers should be able to look forward to a future in which online food delivery is more efficient, more innovative, and less expensive. A merger of two of the three biggest rivals in an already concentrated market risks depriving consumers of that outcome by potentially eliminating competition between the existing market participants.
We urge you to keep track of this potential acquisition and initiate an investigation if the parties reach a merger agreement to ensure that competition is preserved.
Thank you for your attention to this matter.