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Technology

Grubhub, Uber and Postmates accused of antitrust violations

A lawsuit says the platforms’ high commissions and pricing restrictions are stifling competition.
Photograph: Shutterstock

A lawsuit filed this week by a group of restaurant consumers accuses third-party delivery companies Grubhub, Uber and Postmates of antitrust violations resulting in inflated menu prices.

The class action suit alleges that high commissions charged by the platforms force restaurants to charge higher prices. In turn, the platforms’ strict pricing restrictions essentially lock in those prices across the board.

The result, says the suit: “Any restaurant using any defendant’s platform charges all of its customers supracompetitive prices.”

The three platforms named in the lawsuit made up 54% of third-party delivery sales in May, according to consumer analytics firm Second Measure. DoorDash accounted for most of the rest, with 44% share. 

Earlier this week, Uber acquired Postmates for $2.65 billion in stock.

The lawsuit zeros in on pricing restrictions known as most-favored-nation provisions (MFNs) imposed by the three platforms on the restaurants they work with. The MFNs, to varying degrees, prohibit the restaurants from charging lower prices through other channels, such as competing ordering platforms or the restaurant itself.

“Grubhub and Uber’s MFNs thus effectively fix the end price that consumers pay when they order through restaurant platforms,” the lawsuit says, limiting competition and creating higher menu prices for consumers.

DoorDash, which does not use MFNs, is not named in the lawsuit. 

“DoorDash’s ability to compete with defendants without such MFNs is proof that such restrictions are not necessary,” the lawsuit says.

Uber, Grubhub and Postmates did not yet respond to requests for comment. 

The suit was filed Monday in the Southern District of New York. The plaintiffs—Philip Eliades, Jonathan Swaby, John Boisi, and Nathan Obey—are residents of New York City who have ordered food via the defendants’ platforms.

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