ACCC launches investigation in Menulog Eat Now Merger

Date: 09-04-2016

The Fin Review is reporting that the Australian Competition and Consumer Commission will investigate the merger between Menulog  Eat Now as to whether it led to a substantial reduction of competition in online ordering.  “It will be looking to determine if there was a breach of section 50 of the act, which prohibits acquisitions that substantially lessen competition in a market,” according to the Fin Review article.

Menulog and Eat Now merged shortly before the combined Menulog was purchased by Just Eat for $865 million dollars (which works out to be $150,000 per restaurant!)  The absence of a filing for a ruling from the ACCC means that they ACCC has 5 years to investigate the merger and possibly order asset sales.

This is an interesting development for Menulog and Just Eat, which is under pressure to perform given the high valuations placed on Menulog when it was purchased.  Recently it was announced that Just Eats CEO, David Buttress and the Finance Director had almost completely sold out of their Just Eat shares.

It comes at a bad time for Menulog, just 1 week after it released details of the breaching of 1.1 million customer email addresses and this week it has suffered considerable technical issues with many customers reporting on Twitter that they have been unable to order, that they have been missing SMS confirmations and that orders that have been paid for have not been notified to the Restaurants. Our own investigations show a web error when trying to view local restaurants.

 

What does the ACCC investigation of the Menulog Eat Now merger mean for your Restaurant?

We continually see issues that make it a lot harder for Restaurants to compete. This week we were trying to help a Restaurant gain access to a domain that Menulog had registered that was very similar to the domain name of the Restaurant.  Menulog so far has refused.  Both Menulog and Eat Now have a practice of registering domain names very similar to the name of their restaurant ‘partners’ and driving consumers to those websites.  We believe that many of those consumers believe they are ordering direct from the Restaurant.

We have also had reports of Menulog has been taken to the Victorian Civil and Administrative Tribunal of issues with Brandjacking.  Last month we talked to our first Restaurant who was paying 15% commission for their orders, this is a 50% increase from the already expensive 10% that Menulog was charging, but Just Eat have planned to increase commissions.  We believe that   because they now have over 90% of the market, they will be able to increase commissions, because the end consumer never directly sees the price (we all know that Restaurants have increased prices to cover the added costs of the Menulog commission, so it isn’t really free.)  Delivery Hero, sadly from what we see, has never been seen as a viable competitor to the Eat Now / Menulog front runners.

The fact that Menulog Eat Now both do not provide email addresses for the consumers is a critical issue for Restaurants.  It stops them from building an email database and allows Menulog Eat Now to send offers from any restaurant in the area.

Once the investigation gets under way we will see what the ACCC is looking for, but we think that if you, as a restaurant owner, have concerns about the amount of commission charged, the lack of competition and are concerned about Menulog’s ability to increase or decrease your weekly orders based on how they display your Restaurant in their search results, you should consider making a submission, because this is an important opportunity for small restaurant owners to have their say.  Brandjacking and price increases due to lack of competition aren’t fair and lead to increased financial pressure on many restaurants.

If your are looking for a free alternative to Menulog, try our Free Restaurant OnLine Ordering System, FROLO.  Free, easy to use and no contracts to sign.  It is free, easy to set up and builds your email database, not Menulogs.

We believe the next step in the process will be for more Restaurants to start offering incentives around “Order direct from the Restaurant and save.”

 

ACCC investigation Menulog Eat Now
Does the comibined Menulog Eat Now have to much market power over small Restaurants?

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