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NYC Council caps third-party delivery fees

The New York City Council voted to cap commissions on third-party food delivery services during the state of emergency, a move that supporters say will provide relief to small, independent restaurants that have struggled during the COVID-19 pandemic. 

The bill put a 15% cap on the commission that third-party companies could charge restaurants for delivery and a 5% cap for other charges. The bill was part of a package of bills that were designed to help restaurants and small businesses. 

Councilmember Francisco Moya reacted to the council vote on Twitter, saying "Finally, we're giving mom and pop restaurants some relief from the billion-dollar tech giants who've been bleeding them dry for too long."

Violations of the cap would lead to a penalty of $1,000 per restaurant, per day. 

Grubhub blasted the legislation as exceeding legal authority of local officials and said it would hurt local restaurants and small business. 

"This is exactly the wrong proposal," a spokesperson for the company said via email. "Any arbitrary cap — regardless of the duration — will lower order volume to locally-owned restaurants, increase costs for small business owners and raise costs on customers."

The company also said the bill would reduce work opportunities and earnings for delivery workers. 

The vote follows recent legislation in Seattle and San Francisco that capped third-party delivery commissions.

A related bill in the NYC package prevents third-party delivery platforms from charging restaurants for telephone orders that did not result in a transaction, which has been a long-running dispute there. 

The vote comes just days after ride-sharing giant Uber reportedly made an overture to Grubhub on acquiring the rival firm. Uber operates its own food delivery platform called Uber Eats. Both firms compete against rival DoorDash and other smaller food delivery platforms.