CCI orders probe of Zomato, Swiggy conduct, requires investigation
The CCI order comes after restaurant body National Restaurant Association of India (NRAI) moved CCI in July last year, with respect to anti-competitive practices by these food delivery companies.
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FollowThe Indian antitrust watchdog Competition Commission of India (CCI) ordered a wide-ranging investigation into the conduct of food delivery firms Zomato and Swiggy on Monday on various allegations in relation to delayed payment cycles, unfair pricing, platform neutrality, and other aspects.
The CCI order comes after restaurant body National Restaurant Association of India (NRAI) moved CCI in July last year, with respect to anti-competitive practices by these food delivery companies.
“The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the director general (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions,” the CCI noted.
“NRAI has further alleged that OPs are engaging in a dual role on their platform where they list their own cloud kitchen brands exclusively on their platform, akin to private labels, thereby creating an inherent conflict of interest in the platform’s role as an intermediary on one hand and as a participant on the other hand,” the watchdog described in its order Monday.
The order was issued on the complaint filed by the National Restaurant Association of India (NRAI), which represents over 50,000 restaurant operators across the country.
The association had approached the antitrust body in July last year, seeking a probe into the allegations of data masking, deep discounting and violation of platform neutrality against Zomato and Swiggy.
Zomato was accused of charging approximately 27.8 percent of the order value to the restaurants listed on its platform. For cloud kitchen, the commission rate is as high as 37 per cent, the complainant had claimed.
“Given that Zomato and Swiggy are the two biggest platforms present in the food delivery segment, their respective agreements with RPs of this nature are likely to have an AAEC (Appreciable Adverse Effect on Competition) on the market by way of creating entry barriers for new platforms, without accruing any benefits to the consumers,” CCI said in a 32-page order.
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