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Law360 (May 14, 2020, 7:30 PM EDT) -- A New York state lawmaker has introduced a bill that would prohibit food delivery companies including Grubhub, Seamless and Door Dash from charging restaurants any fees during the COVID-19 pandemic, saying the multibillion-dollar operations are preying upon the eateries for profit.
Assemblymember Linda B. Rosenthal, D-Manhattan, said Wednesday that her bill, A.10408, would prohibit the delivery companies from charging local restaurants or their customers a fee for services over the course of the pandemic. As it stands, she said, GrubHub Inc., its brand Seamless, Door Dash Inc. and others charge New York restaurants commission fees between 30% and 40% while tacking on an average fee of 22% for delivery to customers.
"GrubHub, the owner of Seamless, has a market value of nearly $4.5 billion. Postmates Inc. was given a $1.85 billion valuation late last year. Door Dash is valued at $12.6 billion and Uber Eats is worth $55 billion," Rosenthal said in a statement. "As New York's hardworking restaurant owners scrape together crumbs just to keep the lights on amid the COVID-19 pandemic, these charges amount to usury."
Rosenthal, whose Manhattan district includes the restaurant-rich Upper West Side and Hell's Kitchen, said Uber Technologies Inc.'s reported bid to acquire Grubhub would hand the ride-hailing company control of more than half — 55% — of the nation's food delivery market. Meanwhile, she said, Uber continues to charge restaurants a hefty 30% fee despite the pandemic.
The proposal comes as U.S. Rep. David Cicilline, who chairs the House Judiciary Committee's antitrust subcommittee, has ripped into Uber's reported plan to pick up Grubhub, bashing both companies as predatory and saying the move "marks a new low in pandemic profiteering."
Rosenthal warned that Uber's ability to control the market and exploit restaurants will grow even greater if it is allowed to expand its reach with a Grubhub deal.
"Though some delivery companies have reduced fees for certain types of businesses, that is simply not enough," she said in her statement. "With a combined market share larger than some third world economies, these companies, which have made enormous profits in response to the pandemic, can waive fees for a relatively short period of time in order to ensure that New York's beloved restaurants are not counted among the COVID-19 casualties."
On Thursday, Rosenthal told Law360 that it's not clear when the State Assembly will next be called into session, but when members meet, it will be on a Zoom call.
"There are many bills waiting to be voted on, hundreds of them related to the COVID virus, including this bill related to the restaurants," she said.
Representatives for Grubhub, Seamless and Door Dash did not immediately respond Thursday to requests for comment.
Rosenthal was not immediately available for further comment.
--Additional reporting by Anne Cullen and Elise Hansen. Editing by Kelly Duncan.
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