A New York City council member has asked New York Attorney General Letitia James to open an antitrust investigation into Grubhub, The Post has learned.
Mark Gjonaj, the head of the council’s Committee on Small Business, said that the “time may have come” for the AG to revisit the terms of a 2013 settlement agreement that cleared the way for Grubhub’s acquisition of Seamless, according to a July 2 letter obtained by The Post.
“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 the letter.
The letter came to light as scrutiny of the online delivery industry’s fees on restaurants recently has picked up.
In June, the City Council held a hearing on how Grubhub’s charges fees as high as 30 percent for its services, and questioned Grubhub executives about The Post’s reports that the company charged restaurants thousands of dollars in commissions for phone orders that never happened.
The bogus orders are the subject of a potential class-action lawsuit by a Philadelphia eatery called Tiffin.
On Thursday, The Post first reported that New York’s Liquor Authority was developing new rules that will significantly curb the delivery industry’s ability to charge double-digit percentages for online ordering and delivery.
The news sent Grubhub’s shares down 4 percent, to $74 a share on Thursday.
At the June hearing, antitrust lawyer Gregory Frank testified that Grubhub has “substantial monopoly power in the highly concentrated New York City online ordering marketplace,” and controls as much as 69 percent of the market, based on a formula used by the Federal Trade Commission.
That size could give Grubhub leverage over the delivery business, which is separate from its ordering business, Frank said.
“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 told The Post.
A spokesman for Gjonaj’s office declined to comment. The AG’s office didn’t return requests for comment.
“The notion Grubhub/Seamless may have engaged in conduct that has reduced competition is simply incorrect,” Grubhub 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.”
The outcome of any potential antitrust investigation would be uncertain, especially as competitors like Uber Eats and Postmates have gained market share in New York.
“We’ve found consistent Grubhub share loss if anything and believe Uber Eats in particular is gaining share in NYC,” Needham analyst Brad Erickson wrote in a note Thursday.
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