Authorities Must Block Uber’s Anti-Competitive Acquisition of Postmates
Uber’s proposed acquisition violates the Clayton Act and threatens workers
Washington, DC -- The Open Markets Institute urges federal enforcers to block Uber’s acquisition of Postmates, which would consolidate the predatory delivery app market from just four dominant players to three, threatening vulnerable restaurants and gig workers already devastated by the pandemic.
Major delivery apps have a predatory business model that relies on monopolization to build power and squeeze crippling commissions from restaurants reliant on the apps’ dominant platforms. Uber’s acquisition of Postmates, which would put 37% of all food delivery sales in the hands of one company, is just the latest effort to control a once-crowded field. Together, an oligopoly of UberEats/Postmates, Grubhub, and DoorDash would control 99% of the market. The merger violates the Clayton Act’s prohibition against mergers that may lessen competition or tend to create a monopoly. Uber’s post-acquisition market share is only a starting point and will almost certainly rise rapidly, as Uber deploys the myriad of anti-competitive tools at its disposal as a dominant tech platform.
“These destructive delivery apps were not built to help restaurants, provide secure jobs, or even properly deliver food – they were built to monopolize an essential service and reap profits for investors,” says Claire Kelloway, food researcher at Open Markets. “To support small enterprising restaurateurs, protect workers, and rebuild vibrant main streets, enforcers need to stop Uber’s domination game and block this deal.”
Even before the pandemic, delivery apps exploited their predatory power over restaurants. These corporations face a class-action lawsuit and numerous lawsuits and complaints from restaurants alleging deceptive tactics to drive up fees, to force restaurants onto app platforms, to undercut in-house restaurant delivery, and to collude to avoid competing with one another in certain cities.
This deal emphasizes the need for a merger moratorium to prevent financiers from profiteering on the pandemic, pushing devastating deals that line their pockets at the expense of struggling businesses.