Democrats, Led by Sen. Klobuchar, Warn Against Uber/Grubhub Deal

Sen. Amy Klobuchar delivered a letter Wednesday to the country’s top antitrust officials – Assistant Attorney General Makan Delrahim and Federal Trade Commission Chairman Joseph Simons, urging scrutiny of Uber’s potential acquisition of Grubhub. 

Uber, which has a market capitalization of $59 billion, has made an offer to buy food delivery company Grubhub,  which has a market capitalization of $5.3 billion, CNBC has reported. It is unclear whether the two will come to an agreement on price.

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

The spotlight from Klobuchar and other lawmakers is likely an unwelcome backdrop to deal discussions. Such scrutiny can result in CEOs testifying before Congress. Both companies have already drawn negative public attention on issues ranging from restaurant fee policy to worker treatment. 

“As our country grapples with the many health and safety challenges brought about by the coronavirus (COVID-19) pandemic, many consumers have turned to food delivery apps to order meals online, and many restaurants have come to rely on the business they get through these apps to stay afloat,” wrote Klobuchar, D-Minn., along with fellow Democratic Sens. 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 food delivery application providers and raise serious competition issues in many markets around 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 an agreement to merge.”

The senators said that it is “particularly troubling that this merger is being contemplated during a pandemic, when consumer demand has increased and when restaurants are more desperate for revenue than ever.” They said they “have been hearing about the exorbitant fees” that online delivery app companies have been charging to restaurants.