Multinational told Brazil’s antitrust watchdog that exclusivity model was main reason for exit
08/03/2022
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Uber ended on Monday meal delivery service through Uber Eats app
Uber left the meal delivery market in Brazil, but continues to fight against exclusive contracts with restaurants established by iFood in the country.
The multinational, which ended on Monday the food delivery service through the Uber Eats app, filed a complaint against iFood with the General Superintendence (SG) of the Administrative Council for Economic Defense (CADE) on Friday
The company made clear that the exclusivity model maintained by iFood, the market leader with 80% market share, was the main reason for Uber to leave the Brazilian restaurant delivery market.
“Unfortunately, the artificial barriers imposed by iFood with its exclusionary conduct, which are the focus of the present Administrative Inquiry by this SG, contributed to Uber’s decision to terminate the operations of the Uber Eats meal delivery intermediation application,” said the Uber lawyers in the document filed on Friday.
Uber announced its decision to leave the Brazilian meal delivery market on January 7. The company was the second largest. Rappi was the third, according to data from the Brazilian Association of Bars and Restaurants (Abrasel).
In mid-February, Rappi filed a new petition with CADE asking the antitrust watchdog to review a provisional measure from March last year that determines the blocking of new exclusive iFood contracts with restaurants, preserving the agreements prior to the determination.
The exit of Uber Eats from the Brazilian market, as well as the end of the operations of the Delivery Center, an application by BR Malls and Multiplan, in November, were cited as arguments against exclusive contracts with restaurants by iFood, especially for anchor establishments, such as large fast food chains.
“In fact, the evident focus of the exclusionary strategy adopted by iFood with the most popular restaurants, responsible for a significant volume of orders on its platform, reduces the ability of competitors, such as Uber Eats, to compete with iFood,” says the company in its manifestation. “Even if Uber Eats develops business relationships with smaller restaurants and more stores, that would not be enough to exert effective competitive pressure on iFood.”
Uber stressed that it will continue to cooperate with CADE’s investigation into iFood practices, which began in September 2020 by Rappi and which it entered as a third party in January 2021.
In December 2020, Abrasel filed a parallel representation against the market leader in which it defends the end of exclusivity contracts for all companies in the sector.
“Any serious company interested in continuing to operate in the country must adopt the posture that Uber has adopted,” said Paulo Solmucci, president of Abrasel. “Regardless of direct competition, the company must make a contribution so that the market remains competitive,” he said.
Uber concludes its manifestation by stating that it understands “that the practice of exclusivity by iFood constitutes an artificial barrier to entry and expansion in the market of meal delivery services.”
For Victor Rufino, a lawyer at Mudrovish Advogados, which represents Rappi, Uber’s statement “leaves latent the need for continuous monitoring of the market by the CADE, in order to guarantee its timely and effective action in defense of free competition.”
IFood declined to comment.
Source: Valor International