UberEats and Mr D crackdown

The Competition Commission has found that local food delivery platforms have been unable to compete with national platforms. It will, therefore, require market leaders like Mr D and UberEats to implement several changes.

In its Online Intermediation Platforms Market Inquiry Report, the Competition Commission identified UberEats and Mr D Food as the leading platforms in restaurant food delivery.

It said these platforms have been able to grow rapidly by offering aggressive promotions and subsidised delivery.

These platforms have all the restaurant chains listed along with thousands of independent restaurants, enabling them to offer consumers a wide choice in any local area and benefit from network effects. 

Bolt Food is the only other ‘national’ food delivery company operating a similar business model, with a small share but global backing. 

The commission said local delivery services have emerged in areas not serviced by the national delivery platforms, such as townships and small towns. 

These are typically resident entrepreneurs without substantial capital backing and the ability to offer a similar promotion-led model to the national platforms. 

However, the commission found that such local delivery platforms have been unable to compete with the national platforms due to several factors.

• Restrictions imposed by restaurant chains on their franchisees prevent them from using local delivery platforms.
• Lack of transparency about the commission fees charged by national platforms makes it difficult for local platforms to compete on price.
• Wide price parity clauses prevent local platforms from offering lower prices than national platforms.

The commission found that these practices by national platforms impede competition in the food delivery market. As a result, the commission has imposed several measures to address these distortions.

One measure states that national restaurant chains are now prohibited from restricting or dictating their franchisees’ choice of food delivery platform. 

To address the lack of transparency and its resultant disparity, UberEats and Mr D Food will now be required to notify consumers through a pop-up message periodically that they charge restaurants a commission fee for their service, and restaurant in-store pricing may differ from the prices they charge on their service. 

To address the distortion caused by wide price parity clauses, national platforms will be required to remove wide price parity clauses from their contracts with restaurants.

UberEats will also be required to implement a standardised tiered commission fee structure that offers lower fees for independent restaurants.

Mr D Food must set up a promotional rebate for independent restaurants on their gross sales, which can be used for discounts or promotions on the platform and monthly advertising credits.

According to the commission, “These effectively reduce the commission fee paid and promote greater sales for the independent restaurants.”