Klobuchar pushes antitrust regulators to scrutinize potential Uber deal for Grubhub

Senator Amy Klobuchar on Wednesday delivered a letter to the country’s top antitrust officials – Deputy Attorney General Makan Delrahim and Federal Trade Commission president Joseph Simons – calling for a careful review of the potential acquisition of Grubhub by Uber.

Uber, which has a market capitalization of $ 59 billion, has made an offer to purchase food delivery company Grubhub, which has a market capitalization of $ 5.3 billion, reported CNBC. It is not clear whether the two will reach a price agreement.

The talks come as the coronavirus pandemic crushed Uber’s carpool business, but increased demand for food delivery. Uber said earlier this month that it will lay off 3,700 people, about 14% of its 26,900 employees.

The spotlights of Klobuchar and other lawmakers are probably an unwanted backdrop to the discussions. Such scrutiny can lead CEOs to testify before Congress. The two companies have already drawn public attention to issues ranging from restaurant expense policy to the treatment of workers.

“As our country grapples with the many health and safety challenges posed by the coronavirus pandemic (COVID-19), many consumers have turned to food delivery apps to order meals online , and many restaurants have become dependent on the business they go through. these apps to stay afloat, “wrote Klobuchar, D-Minn., with fellow Democrats. Patrick Leahy of Vermont, Richard Blumenthal of Connecticut and Cory Booker of New Jersey.

“A merger of Uber Eats and Grubhub would combine two of the three largest providers of food delivery apps and pose serious competition concerns in many markets across the country,” they said.

“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 a merger agreement.”

Senators have said it is “particularly disturbing that this merger is being considered during a pandemic, when consumer demand has grown and restaurants are in desperate need of revenue more than ever.” They said they “had heard about the exorbitant fees” that online delivery application companies charged restaurants.

Representatives from Uber, Grubhub, DOJ and the FTC did not immediately respond to a request for comment on the letter from the legislator.

Klobuchar, a former presidential candidate, was mentioned as a potential running mate for the apparent Democratic candidate Joe Biden.

In their letter, Klobuchar, Leahy and Blumenthal claim that Uber Eats, Grubhub and Doordash respectively account for 20%, 28% and 42% of online food delivery sales through the app across the country. The merger of Uber Eats and Grubhub would create significant anti-competitive effects, particularly at the local level, argue the Democrats. In New York, for example, they said Uber Eats and Grubhub would hold 79% of the market.

“These market shares are staggering,” they wrote, “especially in light of the leverage that these online delivery companies are already having on restaurants, delivery people, and consumers, especially during this pandemic.” “.

Senators are part of a larger choir of lawmakers calling for tight antitrust control in the midst of the pandemic, fearing that the crisis will allow already powerful players to gain even more share, as petty competition collapses. roadside.

Senator Elizabeth Warren, D-Mass. And its progressive counterpart Alexandria Ocasio-Cortez, D-N.Y., Proposed “The Pandemic Anti-Monopoly Act” to “prevent large companies from exploiting the coronavirus pandemic to engage in harmful mergers.

Representative David Cicilline, D-R.I. said he wanted wording in the next aid package banning most mergers during the pandemic, although such language did not make its way into the $ 3 trillion aid package that Democrats have adopted last Friday.

The Department of Justice and a bipartisan coalition of state attorneys general are working on an antitrust lawsuit against Google as part of an investigation that began before the pandemic.

However, DOJ’s Delrahim told CNBC that some transactions may be “very necessary” now – to ensure businesses have cash and keep workers busy.

He said his department would not review transactions with his “head in the sand”.

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