CCI orders probe in Zomato, Swiggy for alleged unfair business practices

The Competition Commission of India (CCI) has ordered a probe against food delivery platforms Zomato and Swiggy over alleged unfair pricing and their dealings with business partners. The order comes following a complaint filed by the National Restaurant Association of India (NRAI), which represents over 50,000 restaurants.

In its complaint, NRAI had alleged that the ‘anti-competitive’ practices adopted by Swiggy and Zomato were negatively impacting restaurants and threatening their survival. The list included data masking, bundling logistics and listing services and forcing restaurant partners to give discounts to maintain appropriate listing.

“During the pandemic, the magnitude of anti-competitive practices of Zomato & Swiggy have increased manifold and despite numerous discussions with them, these deeply funded marketplace platforms are not interested to alleviate the concerns of the restaurants,” NRAI had said in its complaint last year.

Taking cognizance of the complaint, CCI has ordered the Director General (DG) to investigate the matter and submit its report in 60 days.

The regulator in its order said that there exists a prima facie with regard to the conduct of Zomato and Swiggy that requires detailed scrutiny. The watchdog noted that preferential treatment accorded to restaurant partners wherein these platforms have an equity or revenue interest can create a barrier for other restaurant partners to compete on fair terms.

“Such preferential treatment can be through various ways given the platform’s control over different aspects that influence competition on them, including control over deliveries, search ranking etc. which can only be examined appropriately in an investigation,”: the regulator said.

CCI in its order also touched on the issue of price parity wherein restaurant partners were not allowed to offer lower price or higher discount on their own supply chain or any other aggregator. “Such price parity clause may discourage the platforms from competing on the commission basis as RPs need to maintain similar prices on all platforms and provide similar prices to the customers, regardless of the commission rates paid to the platform,” CCI added.

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