NEW YORK (Legal Newsline) -- New York Attorney General Eric Schneiderman on Monday announced a settlement with two online food ordering services, addressing concerns that a proposed merger would improperly undermine competition in the online food ordering industry.
Seamless North America LLC is a food ordering platform with a uniquely strong market position in Manhattan. The company has a large number of exclusive agreements with Manhattan-based restaurants.
A proposed merger between Seamless and GrubHub Inc. allegedly raised the possibility that Seamless would aggressively enforce its exclusivity provisions with Manhattan restaurants and would use its market position to coerce restaurants and partners to do exclusive business with the merged company.
Schneiderman alleged the prospect merger resulted in a significant risk that the transaction would lead to anticompetitive effects in Manhattan.
"New York's restaurant industry is the best in the world, but its success depends on an environment of free and fair competition," the attorney general said. "With the recent growth in online food ordering, it's especially important that restaurants -- particularly smaller restaurants -- have fair and equal access to online platforms to reach new customers and obtain much-needed extra business.
"This settlement ensures that no single online platform will have a monopoly on access to Manhattan restaurants, and it allows consumers and restaurants the freedom to do business with the website or app of their choice."
Under the terms of the agreement, Seamless and GrubHub agreed to a package of commitments to make sure that alternative online food ordering platforms can compete with the combined business on a level playing field with equal access to Manhattan business partners and restaurants.
For 18 months, Seamless and GrubHub must waive existing exclusive rights with restaurants, prohibit future exclusive contracts with restaurants and prohibit a future exclusive agreement with Yelp Inc.
Seamless and GrubHub will notify Schneiderman's office if they enter into any practices prohibited by the settlement within six months of the termination of the 18-month prohibition period.