DoorDash, Uber and Grubhub sue over New York City delivery fee cap

Companies say the 15% cap interferes with their right to freely negotiate contracts

A delivery man bikes with a food bag from Grubhub in New York. The three biggest food delivery companies, DoorDash, Grubhub and Uber Eats, are suing the City of New York over its law to permanently limit the amount they can charge restaurants that use their services. AP Photo
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DoorDash, Grubhub and Uber Eats are suing New York City over its cap on the amount meal-delivery services can collect from restaurants.

In a complaint filed on Thursday in Manhattan federal court, the companies say the 15 per cent cap interferes with their right to freely negotiate contracts and will probably result in higher prices for consumers and lower earnings for restaurants and delivery drivers. The city’s ordinance is “nothing more than unconstitutional, harmful, and unnecessary government overreach that should be struck down”, the companies said.

The New York City Council originally instituted the fee limit in May 2020 on a temporary basis. Councillors said it was necessary to protect restaurants struggling during the Covid pandemic from high commissions charged by the delivery apps. The council made the cap permanent in August.

Jitse Groen, chief executive of Just Eat Takeaway, which owns Grubhub, said in a Friday morning tweet that the company had worked hard during the pandemic to support restaurants in New York and across the country. He called the cap “unprecedented and unconstitutional”.

“Price controls increase delivery fees for consumers, and therefore lead to a reduction of orders for both restaurants and couriers,” Mr Groen said. “While Grubhub remains willing to engage with the City Council, we unfortunately are left with no choice but to take legal action.”

The city’s law department did not have an immediate response to the complaint.

Shares of DoorDash rose as much as 1.3 per cent on Friday morning after the news, while Uber’s stock increased as much as 1.2 per cent. Just Eat Takeaway’s American depositary receipts fell 0.4 per cent while earlier gaining as much as 0.8 per cent.

Updated: September 11, 2021, 5:19 AM