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New York Attorney General Imposes Restrictions on Seamless and GrubHub Merger
Practical Law Legal Update 8-536-6047 (Approx. 3 pages)
New York Attorney General Imposes Restrictions on Seamless and GrubHub Merger
by Practical Law Antitrust
| Published on 06 Aug 2013 • USA (National/Federal) |
New York Attorney General Eric T. Schneiderman announced a settlement with merging parties Seamless North America, LLC and GrubHub, Inc. to allow their competitors to effectively compete in Manhattan, New York.
On August 5, 2013, New York Attorney General Eric T. Schneiderman announced a settlement with merging parties Seamless North America, LLC (Seamless) and GrubHub, Inc. (GrubHub), the two leading online food ordering services in Manhattan. The settlement addresses the Attorney General's competitive concerns about the proposed merger, particularly related to Seamless's current exclusivity agreements with a large number of Manhattan restaurants that would preclude those restaurants from entering into online ordering contracts with the merged entity's competitors, including potential competitor Yelp, Inc. If enforced, the exclusivity agreements would likely prohibit the competitive online ordering platforms from forming or increasing their restaurant networks.
The three elements of the settlement include that the merged entity:
- Is required, within 45 days of the merger, to provide notice to all Manhattan restaurants party to its exclusivity agreement that the exclusivity provision is waived.
- May not enter into new exclusivity agreements with Manhattan-based restaurants for 18 months.
- Must not, for a period of 18 months, enter into an exclusive business relationship with Yelp, Inc. that would require Yelp to cease doing business with competitors of the merged entity. The merged entity is otherwise allowed to enter a non-exclusive business relationship with Yelp.
The settlement is intended to allow all Manhattan online food ordering services to compete on equal terms and will cease to be in effect after 18 months, when the market has had an opportunity to adjust to the merged entity.
Practical Considerations
This settlement is a reminder that state attorneys general have jurisdiction to challenge and remedy mergers, even if the merger is not reviewed by the FTC or DOJ.