Southern District of New York Daniel Patrick Moynihan U.S. Courthouse at 500 Pearl Street. Photo: NYLJ/Rick Kopstein

Food delivery apps such as GrubHub and Uber Eats are using "unlawful" contracts to bolster their grip on the market for meal deliveries and drive up prices for consumers, according to a new civil antitrust suit in Manhattan federal court.

The proposed class action lawsuit, filed late Monday in the U.S. District Court for the Southern District of New York, targets GrubHub Inc., DoorDash Inc., Postmates Inc. and Uber Eats over their use of "no price competition clauses," which force restaurants to charge uniform prices for menu items, even for food orders that were not generated through their digital platforms.

The arrangement in turn prevents restaurants from offering discounts to customers who would otherwise order directly from businesses or dine-in, buying drinks and tipping waitstaff, the filing said.

"The purpose and effect of the no price competition clause is to act as an unlawful price restraint that prevents restaurants from gaining market share and increased profitability per consumer by offering lower prices to consumers," antitrust attorney Gregory Frank wrote in a 41-page complaint, filed on behalf of a group of New York customers.

"Unable to compete on the basis of price due to Defendants' unlawful restraints, restaurants have seen their precious dine-in market cannibalized by defendants' delivery apps," Frank said. "Plaintiffs bring this claim for relief on behalf of all Americans who would still to enjoy a nice dinner out with their family before Defendants make that impossible."

The three-count lawsuit alleged monopoly and price-fixing violations under the Sherman Act, claiming that each of the defendants wielded their market power to coerce restaurants into agreeing to the contractual clauses, which harmed businesses and consumers alike.

According to the complaint, Postmates and Uber Eats alone accounted for 10% and 20% of food delivery consumer spending, respectively, and were reportedly increasing revenues in 2019.

All four firms, meanwhile, charged restaurants "exorbitant fees" that ranged from 13.5% to 40% of revenue, while the average eatery's profits ranged from 3% to 9% of revenue, the filing said.

The lawsuit came as most restaurants have closed their doors due to the COVID-19 pandemic, which had "annihilated the dine-in market" and had only driven up the demand for food delivery services.

"The rise of the four defendants has come at great cost to American society," the filing said. "Defendants offer restaurants a devil's choice: in exchange for permission to participate in Defendants' Meal Delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the delivery apps, ultimately driving those consumers to defendants' platforms"

GrubHub, DoorDash, Postmates and Uber Eats did not respond to a request for comment.

As of Tuesday afternoon, none of the companies had responded to the suit, and an online docket-tracking service did not list counsel for the defendants.

The plaintiffs, Mariam Davitashvili, Adam Bensimon and Mia Sapienza, are represented by Gregory Frank, Marvin Frank and Asher Hawkins of Frank LLP in Manhattan.

The case is captioned Davitashvili v. GrubHub.

DoorDash, Postmates and Uber Eats are all based in San Francisco. GrubHub is based in Chicago,

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