What happened
The Federal Trade Commission said Friday it will require 365 Retail Markets LLC to divest Cantaloupe Inc.'s Three Square Market business to Seaga Manufacturing Inc. before 365 Retail can complete its $848 million purchase of Cantaloupe.
The agency said 365 Retail, controlled by Garage Topco LP, and Cantaloupe are the two largest providers of micromarket kiosks and related software and services. Micromarkets are unattended convenience-store setups commonly found in offices and breakrooms, offering workers access to prepared food beyond traditional vending machines.
The FTC's proposed order would move Three Square Market, described as a competing micromarket kiosk provider, to Seaga, which the agency said has unattended foodservice retail offerings that do not compete with micromarkets. The divestiture is intended to create a standalone competitor to 365 Retail after the transaction closes.
"Millions of workers rely on micromarket kiosks to buy affordable, fresh food during the workday," FTC Bureau of Competition Director Daniel Guarnera said in the agency's announcement, adding that the divestiture is meant to preserve competition in the micromarket kiosk industry.
The FTC said the consent order resolves charges that the acquisition would eliminate head-to-head competition, likely raise prices for micromarket kiosks and related software and services, and reduce product and service quality. The agency also alleged that higher kiosk costs could be passed through to consumers as higher food prices.
The agency also alleged that, as originally structured, the acquisition would give 365 Retail the ability and incentive to foreclose rivals by limiting interoperability between its products and software services and competitors' offerings. According to the FTC, food service operators could be forced to switch products or services if 365 Retail improperly restricted or hindered software integrations.
The proposed order would require 365 Retail to offer hardware-software integrations on reasonable and nondiscriminatory terms, appoint Edward Buthusiem as a monitor, and give the commission advance written notice for 10 years before acquiring interests in U.S. micromarket kiosk companies.
The commission voted 2-0 to issue the complaint and accept the consent agreement for public comment, and the public will have 30 days to comment. The FTC noted that an administrative complaint reflects reason to believe the law has been or is being violated, while a final consent order carries the force of law for future conduct.