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A New York City council member has asked the state attorney general to open an antitrust investigation into online food ordering and delivery service Grubhub, according to a letter obtained by the New York Post.
In the letter, dated July 2 and addressed to AG Letitia James, Mark Gjonaj, the head of the City Council’s Committee on Small Business, writes that the “time may have come” to revisit the terms of a 2013 settlement agreement that permitted Grubhub to acquire Seamless. Gjonaj writes: “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.”
The news comes just two weeks after a New Food Economy report alleged that Grubhub has been quietly buying up thousands of web domains in restaurants’ names without their knowledge or permission. While Grubhub denied those allegations, saying that provisions in their contracts make clear that Grubhub provides such a service, that hasn’t stopped the recent wave of public scrutiny as more and more restaurant owners accuse services like Grubhub of charging businesses excessively high fees.
At a June City Council hearing, an antitrust lawyer testified that Grubhub currently has “substantial monopoly power” in New York City and controls up to 69 percent of the market, the Post reports. The lawyer, Gregory Frank, told the Post that, should Grubhub use its monopoly power on the food ordering side of business to increase market power on the food delivery side, that could potentially be illegal.
Grubhub, meanwhile, called the accusations incorrect. In a statement obtained by the Post, the company said: “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.”
