NY Lawmaker Asks For Antitrust Probe Into Grubhub

A city council member in New York has asked the state’s attorney general to start investigating Grubhub on antitrust allegations, according to a report by the New York Post.

Mark Gjonaj, the head of the city council’s Committee on Small Business, said the “time may have come” for the attorney general to look back into a 2013 settlement that let Grubhub acquire Seamless.

“While I am not accusing any entity of committing unlawful acts, I do believe that Grubhub’s outsized market share and heavy-handed tactics could lead to artificially reduced competition, which in turn may drive up the commissions paid by struggling locally owned restaurants,” Gjonaj wrote in a July 2 letter.

The letter comes at a time when there is more attention on the level of fees delivery companies are charging restaurants. Some fees are as high as 30 percent when it comes to Grubhub – a recent piece in the Post said the delivery company charged restaurants thousands for phone orders that didn’t happen. Philadelphia-based eatery Tiffin is suing Grubhub for that.

Grubhub’s shares dipped on the news. In a June hearing, antitrust lawyer Gregory Frank said the company possesses a “substantial monopoly power in the highly concentrated New York City online ordering marketplace,” and that it has control of more than 69 percent of the market. This large market size could give it some leverage that other companies don’t have.

“If they’re using the monopoly power in the online ordering business to enhance their market power in the delivery business, it seems that could potentially be illegal and be a cause for regulators to be involved,” Frank said.

Grubhub maintains that antitrust concerns are not an issue. “The notion Grubhub/Seamless may have engaged in conduct that has reduced competition is simply incorrect,” the company said in a statement. “We operate in a dynamic, hyper-competitive sector that has changed dramatically in the past few years and will continue to do so. We face intense competition in New York City and throughout the country.”