• FTC interviewed customers and competitors in September 2025
• Deal could raise concerns about integration between merged firm’s software and third-party products
• Horizontal overlaps in vending software market also a likely concern

The Federal Trade Commission (FTC) is likely investigating vertical integration and/or bundling concerns in the Cantaloupe/365 Retail Markets deal, according to two sources familiar with the situation. These concerns are likely in addition to horizontal overlaps in the vending software market.

The FTC interviewed competitors and customers in September, the sources said. Agency staff “doubled down” to question an example of a potential bundling claim, the first source said.

The FTC inquired about the deal’s effects on vending operators, (365 and Cantaloupe’s customers), as well as how it would affect end consumers, the second source said. There were also questions about overlaps in software systems called vending management software (VMS), and the degree of openness to integrate the merged firm’s VMS with third party products, this source said.

Cantaloupe announced the proposed acquisition by 365 Retail Markets in June. The companies—two of the largest operators in unattended retail management—received a second request from the US Federal Trade Commission (FTC) on 25 September.

365 Retail Markets is a portfolio company of private equity firm Providence Equity Partners. Cantaloupe, which is currently traded on the Nasdaq, will become privately held after the merger.

“The industry is very old-school and locked in. And [customers] don’t like not having options because they have to buy from Cantaloupe or they have to buy from 365. That’s already the sentiment in this industry,” the second source said.

Customers are concerned that the deal will lead to higher prices, being locked into long contracts, and a lack of support from the merged firm, the first source said.

“If they’re joining forces … now you have only one option as an operator, and they can charge whatever they want on pricing, because it’s a vertically integrated hardware, software, payment processing stack. It really locks in the customers to one option,” the second source said.

Innovation in the industry could also be threatened if newcomers are locked out by the merged firm, the second source added.

Horizontal software overlaps 

Cantaloupe and 365 operate in three key areas of the unattended retail market: hardware (such as kiosks, vending machines, smart coolers), cashless payment processing devices, and VMS, the first source explained.

The merging firms are the two largest in the space, both sources agreed. The third-largest competitor is Israel-based public company Nayax, the first source said.

Around 60% of operators who use a VMS are customers of either Cantaloupe or 365, likely split close to evenly between the two, said the first source. Another 20% are likely Nayax customers, the source said.

Cantaloupe’s VMS, called Seed, is the market leader, according to the first source. 365’s VMS, called ParLevel, competes with Seed – although it is possible the market is somewhat segmented, the first source said.

ParLevel has traditionally been more focused on smaller operators (50-1000 machines) and is more “SaaS-friendly,” while Seed has a more “old-school, enterprise feel” and competes mostly in the mid-market and enterprise segments of the market, where its main competitor is Nayax’s VendSys, the first source said.

However, that may have been changing recently, according to the first source. As a marketing and sales stunt, 365 has been giving away access to its VMS for customers of its hardware and/or cashless payment products, the source said.

“I think they were finding ParLevel could win. They were winning deals, probably from Cantaloupe … just by basically giving it away. They’re making their money on the kiosks and the cashless, so they just give away the VMS and let people trial it until they start using it,” the first source said.

“I think 365 had been eating some of Cantaloupe’s lunch by trying to get ParLevel out there,” the first source said.

As part of their investigation, FTC staff will review transaction and bid data to determine how often the merging parties compete against each other for the same contracts and how often they win or lose to one another, an independent antitrust attorney with previous FTC experience explained. FTC economists will then use that data to determine the extent to which ParLevel and Seed are direct competitors, the attorney said.

The FTC could also consider harm to potential competition, if it is found that ParLevel was entering or about the enter the market to compete directly with Seed, the antitrust attorney said. However, the agency has not had a lot of success with that theory in merger cases, the attorney noted.

Vertical integration concerns 

In addition to the horizontal overlaps, the FTC is likely investigating vertical concerns, according to both sources.

365 and Cantaloupe are both already vertically integrated. Some customers find that having one company provide all three aspects they need for their business is helpful and seamless, the first source said. “But I do think that the downside of that is pricing and contracts and support gets worse, usually,” this source added.

The extent to which the merged firm will agree to integrate with competitors – such as allowing an operator to use 365’s kiosks with a competing VMS, or similar – is one industry concern, the first source explained.

The National Automatic Merchandising Association (NAMA) has a set of standards, called Vending Data Interchange (VDI), which are meant to ensure that competitors can integrate with one another. In theory, this should help operators to be able to use competing products, because it would allow them to choose the product that best fits their needs for each segment of the market, the first source explained.

In recent years, however, seamless integration has not always been the case, the first source said. The source described a situation where an operator asked 365 for integration services and 365 essentially declined the request, telling the operator that the process would be “indefinitely delayed.”

“It was the first sign of something changing, where 365 had already gotten large enough to have their own solutions,” he said.

It seems like Cantaloupe has essentially blocked other industry participants from being a part of their ecosystem, the second source said. “If you control the ecosystem, you don’t allow other companies into it, that’s not in your best interest, so you create a moat around the operating system instead of the hardware,” the second source said. “Anybody can buy new hardware, but it’s very difficult to transition or change the operating system.”

After asking for integration with Cantaloupe’s VMS, the second source said that at first they were locked out – and then Cantaloupe asked them to pay a high sum for integration services. That does not make sense when the standards are supposed to be there to enable integration, the second source said. “That, to me, is definitely abuse of power,” this source said.

A 365 executive sits on the board of NAMA, the second source said. And a 2024 press release lists Chad Francis, vice president of software development and engineering at 365 Retail Markets, as chair of the NAMA VDI Task Force.

“On the VMS side, they definitely have a lock. There’s no way around it,” the second source said, adding that the only way to compete is to go after an entirely new set of customers. “There is no way to take their customer away from them,” the second source said.

The second source noted that they have emails and contracts showing Cantaloupe’s behavior, and those documents were shared with the FTC.

365 and Cantaloupe blocking integrations may also create barriers to entry for newcomers, the first source said. “I think anyone new is probably being blocked from being integrated with Cantaloupe, ParLevel or [Nayax’s] VendSys,” the first source said.

Bundling theory 

One 365 customer reportedly told the first source that when they were considering switching to a new VMS, they were told by 365 that unbundling ParLevel from their kiosks would increase the monthly price of the kiosks to five times the current price.

FTC staff “doubled down” on that example during their interview, the first source said.

“A lot of operators can’t [say] directly or in a line item what they’re paying for Cantaloupe VMS because it’s bundled into the monthly cost,” the first source said.

In addition to the integration fee, Cantaloupe also asked the second source to give up their third-party payment processor and switch to its products. “It’s uncomfortable … to concentrate all of the tech within the same provider,” the second source said.

The first example is a classic case of bundling, the antitrust attorney said. However, bundling is a difficult theory for the FTC to prove, and it is not often the backbone of a merger case, the attorney added.

“Bundling is tricky because bundling means you’re giving discounts. That’s the kind of behavior the antitrust laws want to encourage,” the antitrust attorney said.

On the conduct side, however, courts have become more open to bundling theories, the attorney said. For example, private plaintiff Applied Medical won a USD 381m verdict in a bundling case against Medtronic earlier this week, the attorney noted.

“The bigger the penalty is—if you want to call it a penalty to disagree with the bundle or unbundle—the bigger the problem is,” the antitrust attorney said.

Potential remedies

If the “two biggest pies” are allowed to merge, “there should be some guardrails” to help protect innovation, the second source said. A divestiture of one of the VMS products could mitigate some concerns, this source said.

Cantaloupe’s cashless payments business is likely stronger than 365’s, but 365 is the leader on the kiosk hardware side, the first source said. “I could see the secondaries in each of those categories—365 ParLevel and 365 cashless, and then maybe Cantaloupe’s markets—I could see those three being the targets to divest, because they’re secondary, they’re redundant,” said the first source.

Representatives for Cantaloupe, 365 Retail Markets, Providence Equity Partners and the FTC did not respond to requests for comment.