The city of Chicago has settled 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.
The mayor's office announced on Monday that Uber UBER, which owns Postmates, and Chicago reached a deal after a two-year investigation by the city. Chicago put in place an emergency 15% delivery-fee cap related to the COVID 19 pandemic, and issuing other delivery-app companies for not living up to that law and other local rules meant to protect restaurants and consumers.
Today s settlement shows the city's commitment to creating a fair and honest society.
Mayor Lori Lightfoot said in a statement that the marketplace protects both consumers and businesses from unlawful conduct. 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 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.
He said that restaurants reputations and bottom lines can be harmed by third-party delivery services that they do not control, because they are trying to dominate and control the markets so we have no choice but to need them.
Chicago was sued by DoorDash Inc. Several of the allegations against Uber were made by DASH and Grubhub last year, alleging deceptive fees and predatory practices. The lawsuits allege that the companies cause problems for nonpartner restaurants when they scrape information about them online and don't verify their accuracy. According to Betsy Miller, partner at Cohen Milstein Sellers Toll, the law firm that works with the city on the case, said the lawsuit against DoorDash is in the discovery process and there will be a hearing next week in the suit against Grubhub.
Both DoorDash and Grubhub denied the allegations and called the city's lawsuits against them baseless.
A spokesman for the Department of Business Affairs and Consumer Protection told MarketWatch on Monday that the city reached out to all three companies to discuss their concerns about their conduct in Chicago. Settlement discussions were fruitful for Uber. Uber has paid more than $3.3 million for Chicago restaurants that were charged commissions of more than 15% before the caps end on October 31, 2021, and will pay $2.25 million more, according to the settlement agreement. A ride-hailing and delivery company must pay $500,000 to restaurants it listed on its platforms without permission, and provide them with $2.5 million in commission waivers.
According to the settlement agreement, Uber removed all Chicago restaurants it listed on its platforms without consent and agreed not to repeat doing so. The city must pay $1.5 million for the costs of its investigation.
An Uber Eats spokeswoman said Monday that the company was committed to supporting Uber Eats restaurant partners in Chicago and is pleased to put this matter behind us. The company admits that it has no wrongdoing as part of the settlement.