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Question from someone that's not familiar with law, or I guess specifically antitrust (anti-monopoly?) law. How are these acquisitions not in violation of thes

Question from someone that's not familiar with law, or I guess specifically antitrust (anti-monopoly?) law. How are these acquisitions not in violation of these laws. Especially from the Big Tech Cos that slurp up literally any small competitor. From the article: "DoorDash's acquisition of Caviar creates a highly differentiated company with a unique brand and wide-ranging selection." How is this not a play at eliminating competition?

outericky 7y ago
Because there is still a lot of competition? Grubhub, ubereats, and many others.
lacker 7y ago
In US law, eliminating competition is generally fine. It's only a problem when there is a monopoly or close to a monopoly. DoorDash doesn't seem close to having a monopoly on food delivery.
epc 7y ago
It is not illegal to buy competitors (commenting only on US law). It can potentially violate antitrust laws if you eliminate all competition in a market by buying out competitors. But given the existence of Seamless/Grubhub, Uber Eats, and others, plus most of the restaurants still take phone & fax orders, it would be difficult to argue Doordash buying Caviar corners the delivery market.
baddox 7y ago
It would be very strange if all acquisitions of competitors were considered a violation of antitrust law. It's something that I would expect to be very common in a well-functioning, fiercely competitive market.
btown 7y ago
IANAL, but as far as I know generally the standard is "is this likely to cause meaningful harm re: pricing/quality to consumers?" See https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers https://www.ftc.gov/tips-advice/competition-guidance/guide-a... for a fair amount of context. Horizontal mergers happen every day in the private markets (like this transaction), and generally they're a good thing: you're likely to get a premium by selling to a strategic rather than a financial investor (e.g. private equity) since they can value synergy. And anyone who's taken an entrepreneurship course knows that having a larger variety of potential high-quality liquidity events incentivizes the creation of new businesses. The problem is when enough of a market is consolidated in a way that might allow the consolidator to adjust pricing in a consumer-hostile way, which isn't touched by this specific transaction. To your more general question of "how is this not a play at eliminating competition" - consider it more "can we (DoorDash) make more money operating Caviar by finding synergies with our existing infrastructure, than we pay for Caviar based on a model that describes Caviar operating under Square without that benefit?" That's a question of efficiency, not competition, and it's generally a good thing.
closetohome 7y ago
I'd recommend reading up on the Microsoft antitrust case. That's where most of us learned about antitrust law.
lancepioch 7y ago
Eliminating competition isn't illegal. Creating monopolies isn't illegal. Using a monopoly in one industry to negatively affect businesses in another industry or gain a monopoly there is illegal.

outericky 7y ago

Because there is still a lot of competition? Grubhub, ubereats, and many others.

lacker 7y ago

In US law, eliminating competition is generally fine. It's only a problem when there is a monopoly or close to a monopoly. DoorDash doesn't seem close to having a monopoly on food delivery.

epc 7y ago

It is not illegal to buy competitors (commenting only on US law). It can potentially violate antitrust laws if you eliminate all competition in a market by buying out competitors. But given the existence of Seamless/Grubhub, Uber Eats, and others, plus most of the restaurants still take phone & fax orders, it would be difficult to argue Doordash buying Caviar corners the delivery market.

baddox 7y ago

It would be very strange if all acquisitions of competitors were considered a violation of antitrust law. It's something that I would expect to be very common in a well-functioning, fiercely competitive market.

btown 7y ago

IANAL, but as far as I know generally the standard is "is this likely to cause meaningful harm re: pricing/quality to consumers?" See https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/mergers https://www.ftc.gov/tips-advice/competition-guidance/guide-a... for a fair amount of context. Horizontal mergers happen every day in the private markets (like this transaction), and generally they're a good thing: you're likely to get a premium by selling to a strategic rather than a financial investor (e.g. private equity) since they can value synergy. And anyone who's taken an entrepreneurship course knows that having a larger variety of potential high-quality liquidity events incentivizes the creation of new businesses. The problem is when enough of a market is consolidated in a way that might allow the consolidator to adjust pricing in a consumer-hostile way, which isn't touched by this specific transaction. To your more general question of "how is this not a play at eliminating competition" - consider it more "can we (DoorDash) make more money operating Caviar by finding synergies with our existing infrastructure, than we pay for Caviar based on a model that describes Caviar operating under Square without that benefit?" That's a question of efficiency, not competition, and it's generally a good thing.

closetohome 7y ago

I'd recommend reading up on the Microsoft antitrust case. That's where most of us learned about antitrust law.

lancepioch 7y ago

Eliminating competition isn't illegal. Creating monopolies isn't illegal. Using a monopoly in one industry to negatively affect businesses in another industry or gain a monopoly there is illegal.