FTC intervenes to protect consumers from micromarket kiosk deal

The Federal Trade Commission (FTC) took action to protect Americans from rising food prices. The FTC is requiring 365 Retail Markets LLC (365 Retail), the nation’s largest provider of micromarket kiosks, to divest a competing business to complete its $848 million acquisition of Cantaloupe Inc ¹.

Micromarkets are small unattended convenience stores often found in offices and breakrooms that provide access to affordable, freshly prepared food ¹.

Under the FTC’s proposed consent order, 365 Retail will be required to divest Cantaloupe’s Three Square Market business to Seaga Manufacturing Inc. (Seaga) ¹.

Seaga is well-positioned to acquire the Three Square Market business, which will establish Seaga as a tech-enabled, vertically integrated competitor in micromarket kiosks ¹.

FTC Bureau of Competition Director Daniel Guarnera stated that the FTC action seeks to ensure that consumers don’t face higher food prices because of this acquisition ¹.

The divestiture of Cantaloupe’s Three Square Market business will preserve competition in the micromarket kiosk industry, directly benefiting American workers that depend on these kiosks for their meals ¹.

The consent order settles FTC charges that 365 Retail’s acquisition of Cantaloupe will eliminate head-to-head competition, likely driving up the price for micromarket kiosks and related software and services, while reducing product and service quality ¹.

Higher micromarket kiosk costs are likely to be passed on to consumers in the form of higher food prices, the FTC’s complaint alleges ¹.

365 Retail and Cantaloupe offer other back-end software services that allow foodservice operators to manage and operate numerous micromarkets ¹.

365 Retail’s acquisition of Cantaloupe could threaten to give 365 Retail the ability and incentive to foreclose competitors by eliminating interoperability between its own products and software services and those of its competitors, the FTC’s complaint states ¹.

365 Retail could deny rivals the ability to integrate their software with 365’s micromarket kiosks ¹.

Food service operators could be forced to switch products or services if 365 Retail were to improperly restrict or hinder software integration with competitors, which in turn could raise costs for food service operators, the FTC’s complaint alleges ¹.

By increasing costs for food service operators, 365 Retail’s acquisition of Cantaloupe could further increase the cost of food at micromarkets for consumers, the FTC further alleges ¹.

To resolve these anticompetitive concerns, Seaga will acquire Three Square Market, creating a new standalone business that can effectively compete against 365 Retail ¹.