SYDNEY— Uber Technologies Inc. UBER -0.90% will no longer be able to charge restaurants in Australia for delivery mishaps outside their control, after the practice was deemed unfair in a rebuke for tech giants seeking to keep delivery costs low in a rapidly growing sector.
The ride-hailing company’s food-delivery arm, Uber Eats, will amend contracts by the end of the year after Australia’s competition watchdog determined the company’s contracts with restaurants were unfair. The contracts gave Uber Eats the right to refund consumers and deduct that amount from the restaurant even if a delivery problem wasn’t the restaurant’s fault and food had already been picked up by a courier, the Australian Competition and Consumer Commission said Wednesday.
Food-delivery platforms including Uber Eats, Grubhub Inc., DoorDash Inc. and Deliveroo have made it easier for consumers to order restaurant meals directly to their living rooms and offices. But the commissions they charge can lead to unprofitable sales for restaurants and some large chains are pushing back against the fees.
Restaurants in Australia will still be held responsible for mistakes that are within their control, such as incorrect orders or missing food items, and that will be made clear in the amended contacts, the regulator said. It added that restaurants will be able to dispute responsibility for refunds to customers under the contracts. A spokeswoman for Uber in Australia said restaurants have always been able to dispute charges they don’t agree with.
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Jodie Auster, general manager of Uber Eats in Australia and New Zealand, said the changes will “better reflect the way we operate in practice.” She didn’t say whether Uber Eats contracts in other countries have similar provisions or would be changed.
“We place a lot of value on establishing long-term relationships with our restaurant partners and it’s important that we provide a great partner experience, which includes giving them clear information about what to expect from us in a range of circumstances,” Ms. Auster said in a statement Wednesday.
Rod Sims, the Australian regulator’s chairman, said it began its investigation into Uber Eats contracts in April last year following a local media report. The regulator didn’t find many instances of Uber Eats unfairly charging restaurants, but Mr. Sims said it only contacted a limited number of establishments.
“It is impossible to know how much this happened, and whether people just felt like they signed the contract and there was nothing [they] could do,” Mr. Sims said. The regulator also looked into similar contracts from Uber Eats competitors, including Deliveroo and Just Eat PLC-owned Menulog, but those contracts didn’t raise the same level of concerns.
Fishbowl, which has 12 locations in Sydney that serve Japanese-inspired salads, typically calls Uber Eats if there is a delivery-related problem, such as when the courier goes to the wrong address. That is to make sure that Uber Eats will pay the restaurant, said co-founder Nic Pestalozzi.
“We don’t want to be liable for any costs that weren’t actually related to us,” he said. “I don’t think they should be the ones that should be able to just deduct money from a restaurant.”
It is a good thing Uber Eats is changing the contracts, Mr. Pestalozzi said, adding that the company seems to be trying to improve its communication with restaurants.
Uber Eats will also be making changes to its contracts with couriers in Australia, so that Uber Eats won’t be able to terminate couriers without cause or deduct amounts from the courier’s fees for mishaps outside the courier’s control, Mr. Sims said.
Write to Mike Cherney at mike.cherney@wsj.com
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