Jonathan Stempel

NEW YORK (Reuters), A U.S. judge has ruled Wednesday that Grubhub, Uber Eats, and Postmates will face antitrust litigation from diners. They were accused of raising menu prices while exploiting their dominant position in meal delivery during COVID-19.

U.S. District Judge Lewis Kaplan, Manhattan, stated it was reasonable for diners to assume that by requiring restaurants accept “no competition clauses”, they were forced to increase prices no matter where they dine.

    He also said diners plausibly alleged that Grubhub and Uber Eats’ more restrictive clauses discouraged restaurants from using other platforms, despite their need to generate enough sales to stay afloat and offset low profit margins.

Kaplan wrote that “Defendants motion to dismiss was denied in its entirety.”

Restaurants claimed the clauses prohibiting restaurants charging higher prices for takeout or dining in, and Grubhub as well as Uber Eats forbid restaurants charging customers for orders placed on other platforms.

According to them, the damage from high prices for meals was made worse by the “supercompetitive” delivery fees of between 5% and 10% charged to diners as well as 30% commission rates that are often applied to restaurants.

A class action was proposed to seek triple damages and other damages for customers who have dined-in or delivered in the United States from April 2016.

Grubhub, which is part of Just Eat Takeaway.com from the Netherlands, stated that it was dissatisfied with the decision, and would continue to defend its dining-related services.

Uber Technologies (NYSE 🙂 Inc owns both Uber Eats and Postmates. They did not respond immediately to our requests for comment. Legal representatives for both diners stated that they were happy with the outcome.

Delivery companies’ practices were under scrutiny more after the pandemic that forced thousands of restaurants and other establishments to shut down.

Grubhub, Uber Eats Inc and its rival DoorDash Inc are also suing to repeal a New York City ordinance that limits the charges they make for restaurants at 15%. Grubhub as well as DoorDash Inc challenge a San Francisco law similar.

Davitashvili et.al v Grubhub Inc et.al, U.S. District Court Southern District of New York. 20-03000.