Friday, September 17, 2021

Uber Eats, DoorDash, Grubhub sued New York City for commission cap legislation

Food delivery companies DoorDash Inc, Grubhub Inc, and Uber Eats have sued New York City for a legislation that allows food delivery apps to be licensed and permanently limits the commissions they can charge restaurants.

Late Thursday, the three food delivery companies filed a lawsuit in Federal Court in New York. The two companies are seeking an injunction to prevent New York from enforcing the fee cap regulations passed last month, as well as unspecified monetary compensation and jury trials.

The New York City Council approved a piece of legislation in August that restricts food delivery companies from charging restaurants for the use of its platform and requires them to obtain a business license valid for two years.

“These permanent price controls will harm not only the plaintiff, but also the revitalization of the local restaurants New York City claims to serve,” the companies said in a lawsuit filed on Thursday.

Janitor
On November 13, 2020, during the coronavirus disease (COVID-19) pandemic in Manhattan, New York City, Doordash’s delivery men ride their bicycles in the rain. (Carlo Allegri/Reuters)

The lawsuit argues that the legislation is unconstitutional because “it interferes with freely negotiated contracts between platforms and restaurants by changing and stipulating economic terms for the operation of a vibrant industry”.

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The legislation was enacted after the city imposed a temporary cap on the commissions charged by food delivery companies to restaurants during the pandemic, when many restaurants were forced to close or rely solely on takeaways and takeaways.

It attempts to limit the fees these companies can charge restaurants to 15% of food orders for delivery services and 5% for advertising and other non-delivery services.

According to Bloomberg’s second measure of collecting customer payment data, the New York City restaurant takeaway market is almost evenly divided among major platforms.

DoorDash accounted for 36% of the city’s July sales, Grubhub accounted for 34%, and Uber Eats and Postmates accounted for 30%.

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San Francisco has also established permanent commission caps for these services.

Kanishka Singh

Reuters

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This News Originally From – The Epoch Times

Uber Eats, DoorDash, Grubhub sued New York City for commission cap legislation
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