Uber Eats, DoorDash, Grubhub sue New York City for capping commission

Visual from DoorDash website

Food-delivery companies DoorDash Inc, Grubhub Inc and Uber Eats have sued New York City over a legislation to licence food-delivery apps and to permanently cap commissions they can charge restaurants.

The three food-delivery companies filed a lawsuit in federal court in New York late on Thursday. The companies are seeking an injunction that would prevent New York from enforcing the fee-cap ordinance adopted last month, as well as unspecified monetary damages and a jury trial.

The New York City Council approved in August a legislation which limits the amount that food-delivery companies can charge restaurants to use their platforms and requires them to obtain operating licenses that are valid for two years.

“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 companies said in the lawsuit filed on Thursday.

The suit argues that the legislation is unconstitutional because “it interferes with freely negotiated contracts between platforms and restaurants by changing and dictating the economic terms on which a dynamic industry operates”.

The legislation comes after the city enacted temporary caps on the commissions food delivery companies charged restaurants during the pandemic, when so many of them were forced to close or rely on delivery and carry-out alone.

It seeks to limit the amount those companies can charge restaurants to 15% of food orders for delivery services and 5% for advertising and other non-delivery services.

The New York City restaurant delivery market is split almost evenly among the major platforms, according to Bloomberg Second Measure, which collects payment data from customers.

DoorDash commanded 36% of July sales in the city, Grubhub 34% and Uber Eats and Postmates a joint 30%.

San Francisco has also enacted permanent commission caps on the services.

Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.