Grubhub (NYSE: GRUB), DoorDash, Postmates, and UberEats (NYSE: UBER) are facing a potential class-action lawsuit for allegedly employing exploitive pricing and potentially using anti-competitive practices.
The lawsuit, which was filed in New York Federal Court on Monday, is seeking class-action status against the four delivery companies. The lawsuit has been filed by three consumers in the State of New York; Mariam Davitashvili, Adam Bensimon, and Mia Sapienza. Neither the plaintiffs nor any of the defendants named in the lawsuit have spoken to the Media at the time of writing.
According to the suit, the listed companies allegedly engaged in anti-competitive practices by requiring restaurants that wish to use their services to sign restrictive contracts. The contracts included a "no price competition" stipulation that required restaurants to charge uniform prices for food items, including food ordered at the specific restaurant and not through the service.
The plaintiffs also argue that the services charge "exorbitant" fees that take a significant portion of income for restaurants made through their service. The fees range anywhere from 13.5% to 40%, which leaves restaurants with thinner margins for any orders through delivery apps.
"Specifically, Defendants use their market power to impose unlawful price restraints in their merchant contracts, which have the design and effect of restricting price competition from competitors in order to maintain ... market share," claims the suit.
The lawsuit comes at an interesting time; with a fraction of the population indoors weathering the coronavirus pandemic, many of those in lockdown are flocking to food delivery apps, both in Europe and in the United States. The increased dependence on delivery apps, including grocery delivery apps such as Instacart, has already bred its fair share of concerns, such as the safety of gig workers and the potential of them becoming vectors for the spread of the coronavirus.
The possibility of anti-competitive practices by some of the largest delivery apps on the market could directly harm restaurants already suffering from reduced traffic, as the direct-sales that restaurants primarily relied on to survive have all but dried up, forcing them to rely mainly on app-based deliveries and carryout orders.