Wed, 27 Oct 2021

NEW YORK CITY, New York: DoorDash, Grubhub and Uber Eats filed a lawsuit in a New York federal court on Thursday suing the city, in an attempt to overturn legislation for licensing food-delivery apps that permanently capped the commissions they charged restaurants.

The three food delivery companies aim to prevent New York City from enforcing a fee-cap ordinance enacted in August, as well as seek unspecified monetary damages and a jury trial.

A law limiting the amount food-delivery companies can charge restaurants to use their platforms, and requiring them to obtain two-year operating licenses, was approved by the New York City Council last month.

In their lawsuit, the companies stated, "Those permanent price controls will harm not only plaintiffs, but also the revitalization of the very local restaurants that the city claims to serve."

The legislation is unconstitutional, as "it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates," they argued.

Prior to the legislation, New York City implemented temporary caps on the commissions food delivery companies could charge restaurants during the COVID-19 pandemic, when many either closed or relied on delivery and take outs to survive.

Under the legislation, food delivery companies can charge restaurants a 15 percent commission for food ordered for delivery, and 5 percent for advertising and other non-delivery services.

According to data collection platform Bloomberg Second Measure, the city's food delivery market is divided almost evenly among the main delivery apps, with DoorDash accounting for 36 percent of sales in July, Grubhub for 34%, and Uber Eats and Postmates for another 30 percent.

Similar permanent commission caps on food delivery services have been enacted by San Francisco.

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