Delivery Apps Antitrust Action
FRANK LLP has filed a class action lawsuit against Grubhub Inc. (also doing business as Seamless) (“Grubhub”), DoorDash Inc. (“DoorDash”), Postmates Inc. (“Postmates”), and Uber Technologies, Inc. (“Uber”), in its own right and as parent of wholly owned subsidiary Uber Eats (“Uber Eats”) (collectively, "Defendants").
This class action, filed in the United States District Court for the Southern District of New York, is brought on behalf of two Classes: (1) individuals who purchased meals directly from any restaurant contracted with Defendants’ delivery-application software platforms (the “Direct Class”); and (2) individuals who purchased dine-in meals from any restaurant that was contracted with Defendants’ delivery-application software platforms (the “Dine-In Class).**
Defendants own and operate software platforms (the “Delivery Apps”) that digitally connect restaurants to consumers who want meal takeout or meal delivery. By providing consumers with a list of restaurants in their apps, Defendants promote themselves to restaurants as more than just an electronic transaction platform, but also a marketing service.
Defendants obtained monopoly power over both meal delivery consumers and restaurants in the major local markets throughout the U.S. by being first to market “Online Meal Ordering Platforms” in these places. Because of the Delivery Apps’ market control in the respective markets, consumers and restaurants have little choice but to do business with them. For example, in the New York City market, Grubhub has a whopping 66% marketshare of the market for meal delivery.
Defendants charge restaurants fees ranging from 13.5%–40% of revenues, even though the average restaurant’s profits range from 3%–9% of revenues. In return, restaurants get little value compared to the benefits that merchants receive from a platform like American Express. In addition, Defendants use their market power to impose unlawful price restraints in their boilerplate merchant contracts, which prevent restaurants from charging different prices to meal delivery customers than they charge to dine-in customers for the same menu items.
All of this harms consumers and restaurants alike. Restaurants have to charge consumers supra-competitive prices to those who do not buy their meals through the Delivery Apps, so consumers are driven to purchase meals through the Apps. But because of Defendants’ unjustifiably high fees, meals sold through the Apps are more expensive than they should be. And Defendants’ merchant contracts ensure that restaurants cannot directly offer lower-price options to consumers, in particular those who are more likely to dine in.
FRANK LLP's recently filed class action lawsuits alleges that Defendants' misconduct amounted to violations of the Sherman Antitrust Act.
If you have any questions about this lawsuit, or wish to discuss your rights or interests with respect to it, please contact us.
** Excluded from the Direct Class are Defendants, and their officers, directors, management, employees, subsidiaries, and affiliates, and all federal governmental entities, as well as purchases made in the Dine-In Market. Excluded from the Dine-In Class are Defendants, and their officers, directors, management, employees, subsidiaries, and affiliates, and all federal governmental entities.