Federal Trade Commission orders divestiture in 365 Retail-Cantaloupe deal

Micro market kiosks are getting heightened antitrust scrutiny as the Federal Trade Commission scrutinizes 365 Retail Markets' planned acquisition of Cantaloupe Inc.

The FTC said May 1 that 365 Retail Markets LLC will be required to divest Cantaloupe Inc.’s Three Square Market business as a condition of completing its planned $848 million acquisition of Cantaloupe.

According to the FTC, the transaction would combine the two largest providers of micro market kiosks, along with related software and services used by foodservice operators to manage and run micro markets in workplaces and breakrooms. The agency alleged that the deal, as structured, would eliminate head-to-head competition and could lead to higher prices for micro market kiosks and related software and services, with higher costs potentially passed on through micro market food prices.

Under the proposed consent order, 365 Retail must sell the Three Square Market micro market kiosk business to Seaga Manufacturing Inc. The FTC said Seaga’s existing unattended retail offerings position it to acquire Three Square Market and operate it as a standalone competitor in micro market kiosks.

The Federal Trade Commission also raised concerns about interoperability, alleging the combined company could have the ability and incentive to restrict integration between its kiosks and back-end software and those of competitors, potentially forcing operators to switch providers and raising operating costs.

In addition to the divestiture, the proposed order requires 365 Retail to offer software and hardware integrations on reasonable and non-discriminatory terms to customers and third parties.

The order would also appoint Edward Buthusiem as monitor to oversee compliance, including receiving notifications when integration requests are not completed or when integration fees increase for existing integrations.

For 10 years, 365 Retail would also be required to provide advance written notice to the Federal Trade Commission before acquiring any interest in a U.S. company involving micro market kiosks.