Uber Technologies filed a lawsuit against delivery giant DoorDash in California’s Superior Court on February 14, 2025 alleging the latter of engaging in anticompetitive practices that stifles competition and increases expenses for restaurants and customers. Uber claims that DoorDash uses coercive tactics to force restaurants into signing exclusive contracts with them.
Both DoorDash and Uber Eats provide while-label solutions to restaurants who accept delivery orders directly from their websites or apps. This allows them to gather customer information and get a better understanding of customer’s ordering habits. These restaurants work with DoorDash through its Drive On-Demand product. They also offer advertising feature in their apps for those who want to promote their businesses. While DoorDash controls more than 50% of all the third-party deliveries in the U.S., it is also the largest first-party delivery provider, partnering with over 90% of high-value restaurant brands.
Recently, many restaurants have claimed that they are dissatisfied with DoorDash’s practices. DoorDash allegedly threatened multiple restaurants of higher fees, reduced search ranking, low visibility and even removal from its app unless they agree to use their services of Drive On-Demand and first party delivery services instead of opting for its competitors like Uber Direct. As most of the restaurants receive a large percentage of their third-party delivery orders from DoorDash’s App and they pay fees to DoorDash for those orders, they have no choice but to cave into the demands because of their market power. Even though giving into DoorDash’s demands in against their interests of first-party deliveries, the restaurants simply cannot afford to be heavily penalized or get excluded from the app as it will severely affect their business. Uber Eats claims that DoorDash’s such underhanded tactics have cost them millions of dollars’ worth of revenue and illegally restricted its ability to expand their first- party delivery platform, Uber Direct.
There are multiple cases where restaurants either backed out of long-term deals with Uber Direct or terminated existing contracts due to DoorDash’s alleged misconduct. For instance, one of the large restaurant chains in the U.S. that had agreed to use Uber Direct backed out after DoorDash threatened to hike its commission rates by 30%. Another restaurant claimed of getting removed from DoorDash’s app after they expressed interest in entering a partnership with Uber Direct. Multiple restaurants complained they feel like they have a ‘gun to their head’ and that they are being bullied by DoorDash. Pursuant to this, Uber seeks an injunction against DoorDash to prevent them from continuing unlawful practices as well as monetary damages for the lost revenue. Responding to these allegations, DoorDash states that Uber has no merits and that their claims are frivolous and unfounded based on their inability to offer traders and consumers a quality alternative.
In a similar fashion in India, an investigation by the Competition Commission of India (CCI) revealed that prominent food delivery companies Swiggy and Zomato have breached competition laws by entering into exclusivity contracts with restaurants. Zomato entered into exclusivity contracts with specific restaurant partners by incentivizing them with lowered commission rates. On the other hand, Swiggy promised increased business to specific restaurants if they listed exclusively on their platform. These practices hinder market competition, negatively impact smaller restaurants and poses a threat to the entire food delivery industry.
To provide a fair playing field, when there are co-preferred arrangements for multiple companies, the companies can compete with each other through automated auction process where ideally the provider with the fastest delivery time and best balance of reliability and cost wins, which benefits both the customer and the restaurant. Healthy competition in an open market benefit both restaurants and consumers with lower prices, better choices and higher quality of products and services.
Business agreements that manipulate markets conditions to curb competition are known as Anti-Competitive Agreements. These agreements majorly comprise of output limiting, market sharing, price parity, bid rigging, price fixing etc. They illegally manipulate the supply, demand and pricing and function against the principles of fair competition in an open market which affects both rival businesses and consumers. Forcing customers into monopoly by threats results in reduced economic growth, market inefficiency, lower level of investments, stifles innovations and worsen productivity. MSMEs who lack financial backing to compete with bigger corporations are particularly affected by anti-competitive agreements. It restricts their potential growth and discourages business ownership, making them susceptible to price fixing and exclusionary practices by larger rivals who engage in unfair trade practices. To obtain a competitive edge, businesses are encouraged to engage in fair competition and improve the quality of goods and services.
Strong anti-trust laws such as Clayton Antitrust Act, The Sherman Antitrust Act, Federal Trade Commission (FTC) and The Competition Act, 2002 are enforced in U.S. and India respectively which prohibits deals that materially reduces competition, abuse of dominance and anti-competitive agreements.
Competition regulators worldwide aided by international groups like “The International Competition Network” are working together to regulate cross- border anti-competitive practices. It involves exchanging data, carrying out legal proceedings and undertaking joint investigations to combat anti-competitive activities that has impacted several countries.
Anti-competitive agreements seriously jeopardize financial efficiency and customer welfare in the markets which impedes overall economic progress. As Uber and DoorDash continue to navigate the complex issues surrounding antitrust concerns and unlawful competitive business practices, this case highlights broader implications for market competition and consumer choices. Sustaining fair competition and encouraging economic development will need constant efforts to fortify competition laws and law enforcement procedures, as market places continue to evolve and various new obstacles may come to the fore.
Authors: Seema Meena, Manasvi Shah & Devanshi Gotecha.