Monopolistic behavior by restaurant-food-delivery firms DoorDash, Uber Eats, Postmates and Grubhub makes restaurant food more expensive for consumers whether they’re dining out or dining in, a lawsuit filed in federal court alleges.
“The rise of the four defendants has come at great cost to American society,” claimed the lawsuit by three consumers in U.S. District Court in New York.
Each of the firms uses “monopoly power” to prevent competition, limit consumer choice and force restaurants to agree to illegal contracts that have “the purpose and effect of fixing prices,” the suit claimed.
Chicago-based Grubhub declined to comment on the lawsuit. Uber Eats and Postmates, headquartered in San Francisco, did not immediately respond to requests for comment. A spokesperson for DoorDash, also a San Francisco company, referred this news organization to company press releases.
The four companies give restaurants a “devil’s choice” that requires them to keep dine-in prices the same as delivery prices if they want to be on the app-based delivery platforms, the suit claimed. And restaurants must pay commissions to the delivery firms ranging from 13.5% to 40%, the suit alleged. However, some of the companies have cut fees for restaurants during the coronavirus pandemic.
Establishments are forced to “calibrate their prices to the more costly meals served through the delivery apps,” the suit alleged.
On Friday, an order by San Francisco Mayor London Breed’s office capping at 15% the fees delivery firms charge to restaurants during the coronavirus pandemic said the commissions “can wipe out a restaurant’s entire margin.” The City of Santa Cruz has also imposed a 15% fee cap, effective Thursday.
DoorDash, responding to the pandemic, announced Thursday it was cutting fees to restaurants with five or fewer outlets by 50%, starting Monday. It has also said independent restaurants can until the end of April sign up for free and pay no commissions for 30 days. Restaurants already signed up with DoorDash will pay no fees for orders picked up by customers, the company said in a press release.
Grubhub last month said it would delay collection of up to $100 million in fees from restaurants affected by the pandemic.
The lawsuit claimed that the four firms’ “monopoly power is distributed unevenly,” with one or two of them having “majority control” in large metropolitan regions.
The three plaintiffs, all from New York state, are seeking unspecified damages and class-action status, to bring in “tens of millions” of consumers who since April 14, 2016 have bought meals directly from restaurants signed on with the delivery companies. “But for Defendants’ anticompetitive actions … consumers would have been offered lower menu prices,” the suit alleged.
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