By Levi Sumagaysay
'They're trying to dominate and control the markets so we have no choice but to need them,' Chicago restaurateur says
The City of Chicago has reached a $10 million settlement with Uber Technologies Inc. stemming from allegations that Uber Eats and Postmates listed restaurants on their platforms without consent, and that restaurants were charged more than legally allowed.
Uber (UBER), which owns Postmates, and Chicago reached the deal after a two-year investigation by the city, the mayor's office announced Monday. Chicago put in place an emergency 15% delivery-fee cap related to the COVID-19 pandemic, and is suing other delivery-app companies for not living up to that law and other local rules meant to protect restaurants and consumers.
"Today's settlement reflects the city's commitment to creating a fair and honestmarketplace that protects both consumers and businesses from unlawful conduct,"Mayor Lori Lightfoot said in a statement. "There is no room for deceptive and unfair practices."
Scott Weiner, co-owner of the Fifty/50 Restaurant Group in Chicago, told MarketWatch on Monday that "while I'm very happy Uber has settled with the city -- and Mayor Lightfoot and the city deserve credit -- federal antitrust regulators have to look at this."
Weiner said Postmates had listed several of his group's 15 restaurants without permission, and that he plans to submit an application for compensation under the settlement. He likened the giant third-party delivery platforms to utilities and said their practices should be scrutinized.
"They're trying to dominate and control the markets so we have no choice but to need them," he said, adding that restaurants' reputations and bottom lines can be harmed by third-party delivery services which they do not control.
Chicago sued Uber competitors DoorDash Inc(DASH) and Grubhub last year, alleging deceptive fees and predatory practices that include behavior similar to some of the allegations against Uber. For example, the lawsuits allege that the companies cause problems for nonpartner restaurants when they scrape information about them online and don't verify their accuracy. Both DoorDash and Grubhub have denied the allegations and called the city's lawsuits against them baseless.
"The city reached out to all three companies to discuss its concerns about their conduct in Chicago," a spokesperson for the Department of Business Affairs and Consumer Protection told MarketWatch on Monday. "Settlement discussions proved fruitful in Uber."
Uber has paid more than $3.3 million to Chicago restaurants that were charged commissions of more than 15% before the caps expired on Oct. 31, 2021, and will pay $2.25 million more, according to the settlement agreement. The ride-hailing and delivery company also must pay $500,000 to restaurants it listed on its platforms without permission, and provide them with $2.5 million in commission waivers.
In addition, Uber has removed all Chicago restaurants that it listed on its platforms without consent and agreed not to repeat doing so, according to the settlement agreement. Finally, Uber must pay $1.5 million to the city for the costs of its investigation.
"We are committed to supporting Uber Eats restaurant partners in Chicago and are pleased to put this matter behind us," an Uber Eats spokeswoman said Monday. The company admits no wrongdoing as part of the settlement.
(END) Dow Jones Newswires
December 05, 2022 16:33 ET (21:33 GMT)
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