Antitrust Law Daily Wrap Up, ANTITRUST NEWS: New York attorney general seeks concessions from merging online food ordering services, (Aug 5, 2013)

By Jeffrey May, J.D.

Two leading online food ordering services, Seamless North America, LLC and GrubHub, Inc., have agreed to resolve antitrust concerns raised by New York Attorney General Eric T. Schneiderman over the impact of the proposed merger on such services in Manhattan. The attorney general's office announced today that the companies have agreed to a package of commitments to ensure that alternative online food ordering platforms can compete with the combined business on a level playing field, with equal access to key Manhattan restaurants and business partners.

According to the New York attorney general's office, there was a significant risk that the transaction would have anticompetitive effects in Manhattan due to a large number of exclusive agreements between Seamless and Manhattan-based restaurants. If these agreements were enforced by the merged company, those restaurants would be prevented from contracting with competing online food ordering platforms, such as Delivery.com, LLC and Eat24.com, LLC. Yelp, Inc. announced last month that it had entered into a partnership with Delivery.com and Eat24 to provide restaurant delivery and/or takeout services via Yelp’s website and/or mobile applications. The state attorney general expressed concern that Yelp’s ability to secure restaurant coverage for its new service in Manhattan could be impaired by enforcement of the exclusive agreements.

Under an Assurance of Discontinuance, Seamless has agreed to waive the enforceability of any exclusivity provisions contained in its agreements with restaurants located in Manhattan within 45 days of closing of the merger. In addition, for 18 months following closing, the companies will not enter into any new exclusive agreements with restaurants located in Manhattan (with limited exceptions). The parties also agreed that if the merged company entered into a business relationship with Yelp in the next 18 months relating to online food ordering in Manhattan, that relationship would not be exclusive.

The companies announced their proposed merger in May 2013. At that time, it was estimated that the combined organization would serve more than 500 U.S. cities, with access to more than 20,000 local takeout restaurants.

Seamless is the nation's largest online and mobile food ordering company. With offices in New York City and the United Kingdom, Seamless has an extensive network of restaurants in New York, Washington, D.C., Boston, Chicago, San Francisco, Los Angeles, Philadelphia, London, and other U.S. cities. GrubHub is a privately held company headquartered in Chicago.

Attorneys: Eric J. Stock for Attorney General of the State of New York. Margo Drucker for Seamless North America LLC. Mark Tully (Goodwin Procter LLP) for GrubHub, Inc.

Companies: GrubHub Inc.; Seamless North America LLC; Delivery.com, LLC; Eat24.com, LLC; Yelp, Inc.

News: Antitrust NewYorkNews