ACCC boss to investigate allegedly ‘unfair’ Uber Eats contracts

By business reporter David Chau

A close-up of UberEATS delivery drivers on scooters parked in front of a restaurant.
The ACCC’s chairman says he will “have a look at” the company’s allegedly unfair contracts.(Reuters: Neil Hall)

Australia’s competition regulator has signalled that it plans to investigate Uber’s allegedly unfair contracts with restaurant owners who have signed up to its Uber Eats delivery app.

The ABC has received complaints from restaurant owners who allege their contracts with Uber are unfair and impose onerous obligations on them.

One of them was Josh Arthurs, the owner of Burgers by Josh, who cut his ties with Uber and criticised the California-based multinational for charging restaurant owners a 35 per cent commission.

Mr Arthurs also slammed Uber for recently amending its refund policy to require restaurateurs to pay a percentage of customer refunds in the case of missing or incorrect food items — even in situations where he alleges it is unclear whether the restaurant or driver is at fault.

“Certainly, we’ll have a look at it,” Australian Competition and Consumer Commission (ACCC) chairman Rod Sims told RN Breakfast this morning.

“We have three bits of the law we can deal with here.

“One is business-to-business — are they misleading the people they’re dealing with?

“Two is, are they engaged in unconscionable conduct, putting all the conduct together?

“And thirdly, are the terms with which they work unfair? So, there’s a lot to look at there.”

For conduct to be “unconscionable” under consumer law, it needs to be more than just “unfair”.

On its website, the ACCC said it would look for any conduct which is “particularly harsh or oppressive” or which goes against “good conscience” judged against the norms of society.

Among other things, the regulator will consider the relative bargaining strength of the parties and the use of undue influence or unfair tactics by the stronger party — Uber in this case.

In addition, the ACCC will also consider whether the terms imposed went beyond what is “reasonably necessary” to protect the stronger party’s legitimate interests.

“We will work with the ACCC should they wish to investigate,” an Uber Eats spokesperson said.

“The ACCC can reach out to us directly with any questions they may have.”

Screenshots of Uber website with pictures and description of food, highlighting the words 'we deliver'.
Uber says it’s not a delivery service but its website boasts “You crave, we deliver”.(Uber)

What’s in Uber’s contracts?

The issue revolves around the terms restaurant owners must accept if they want to have their food delivered through Uber Eats.

Firstly, they have to agree that Uber doesn’t provide “any delivery or logistics services” — even though Uber boasts that “we deliver” in several sections of its website.Dark kitchens cooking the online menu’Dark kitchens’ are being built in Australia to produce food only for the delivery market.Read more

The Uber Eats contract also states that the drivers are the “agents” of the restaurant — even though it’s Uber that pays them and controls their workflow.

Furthermore, if the food becomes “substandard” (for example hot food falling below 60 degrees Celsius), Uber has the power to demand that the restauranteur cover the customer refund.

“The restaurant could give a piping hot pizza to the Uber driver,” said Ben Robertson, a lawyer from Carroll & O’Dea.

“But by the time it gets to the consumer, because of the route the driver takes, or the number of deliveries he takes along the way, it could be stone-cold.”

Mr Robertson said Uber seemed to be imposing this “fiction” to shift responsibility for deliveries, even though the restaurant owners have no control over the Uber delivery driver’s wages or workflow.

What to look for in unfair contracts?

If the ACCC decides to take this matter to court, and provided the judge decides the contract is unfair, the offending terms will be void — or non-binding for the weaker party (the restaurant owner in this situation).

This applies to standard form contracts that were entered into after November 12, 2016 — as long as one of the parties is a small business (20 employees or less).

A standard form contract is one that has been prepared by one party — say, Uber — and where the other party has little or no opportunity to negotiate the terms. Essentially, it would be on a ‘take it or leave it’ basis.

Furthermore, the upfront price payable under the terms is no more than $300,000 — or $1 million if the contract is for more than 12 months.

A customer using the Uber Eats app on her mobile phone.
A customer using the Uber Eats app on her mobile phone.(Uber)

A typical example of an unfair term is one that allows the stronger party — but not the other — to avoid or limit their responsibilities in their contract.

“The ACCC may look into what Uber told the restaurants, and compare it with what’s actually in the contract,” Jeannie Paterson of Melbourne University’s law school said.

“Did Uber tell the restaurants that it performs delivery services, and would be responsible for quality control over their food?

“Contrary to that, when you look in the contract, it says something different as Uber claims it’s not a delivery service — but a technological platform.

“And the contract also says the restaurant owners [not Uber] are responsible for quality control, even when the drivers have taken the food off their hands.”

Uber Contract

Source: ABC News Australia