The leading class restaurant delivery brand Uber Eats and its associate Postmates will have to face a proposed class litigation case.
This is after the companies’ policies have driven up the price of restaurant food.
However, this is after federal judge refused to dismiss the case this past Wednesday.
The claim had been initially filed in 2020, claims that by forcing restaurants into “no-price competition clauses.”
Major delivery services are inflating the price of ordering from the restaurants they work with. Nonetheless, this is because the clauses deter restaurants from selling their food cheaper anywhere else.
“Defendants charge restaurants fees ranging from 13.5 percent to 40per cent per cent, even though the average restaurant’s profits range from 3 percent to 9 percent of revenues,” Frank LLP, the law firm handling the suit, wrote on their website.
“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.”
Grubhub, Uber Eats, and Postmates had wanted the case to be dismissed. However, the U.S. District Judge Lewis Kaplan in Manhattan refuted that request.
According to Bloomberg, writing that the suit “alleges plausibly that restaurants cannot feasibly avoid doing business” with these delivery companies and “that restaurants—being foreclosed from lowering prices in the direct markets to attract sales—have had no choice but to raise prices in both the platform and direct markets.”
