Rappi, Uber Eats Triumph In Initial Round Of Antitrust Case

Rappi, a SoftBank-backed Latin American delivery app, along with Uber Eats, have won the first round of a dispute against their main rival in Brazil, iFood, Reuters reported.

Antitrust watchdog CADE said iFood has to stop signing exclusivity deals with restaurants, according to Reuters. The deal is a win for Uber Eats and Rappi because it will keep allowing for competition. CADE also said iFood can’t tweak current contracts including the exclusivity clauses until a final decision is reached in the case.

Rappi initially complained in September, saying the company was squashing its competition through the demands that restaurants only work with iFood, Reuters reported. That also created high barriers of entry for new delivery companies. Uber Eats seconded Rappi’s complaint.

In addition, another complaint came in from the Brazilian association of restaurants, which said iFood was taking advantage of the pandemic in order to make restaurants losing business and dependent mostly on delivery sales sign exclusivity contracts, according to Reuters.

The restrictions to the exclusivity deals will be valid through the investigation and until CADE reaches its final decision, Reuters reported.

In January, both Uber Eats and Rappi dropped the fees they were charging to deliver meals in Mexico. The move came as food industry trade groups were facing financial pressures during government-mandated lockdowns amid the pandemic. One group said its members were paying fees of as much as 30 percent of the price of a meal, arguing the costs had become “unsustainable.”

Uber and Rappi dropped their fees to 17 percent and 16.5 percent, respectively, in February. Both companies are charging 19 percent in March and will charge 22 percent in April.

Another delivery app, Didi Food, dropped its commission to 23 percent.

The pandemic has hit Mexico especially hard, with reports saying 13,500 restaurants have closed in Mexico City since the start.