CCI probe finds Zomato, Swiggy violating competition norms

Swiggy, Zomato in hot soup as duo violating antitrust norms

The Competition Commission of India (CCI) probe has found that food delivery platforms Zomato and Swiggy indulged in unfair business practices, including alleged preferential treatment to some restaurant partners. The detailed investigation was ordered by the Competition Commission of India (CCI) in April 2022 and the probe report was submitted to the regulator earlier this year.

Under the norms, the CCI Director General’s report has been shared with the parties concerned and later, they will be called for hearings by the watchdog. After gathering all the views and explanations, the regulator will pass the final order. The decision to probe the two entities had come from a complaint filed by the National Restaurant Association of India (NRAI).

The sources said the probe has found that the two entities indulged in anti-competitive practices, including allegedly extending preferential treatment to some restaurant partners. The report was submitted to the regulator earlier this year, they added.

NRAI said it has reviewed the redacted investigation report that was sent to it in March 2024. “In order to properly protect the interests of the market, we have petitioned the High Court very recently in November 2024 to request CCI to grant us access to the report in its entirety,” the association said in a statement.

NRAI President Sagar Daryani hoped that CCI will also speed up the investigation of the other issues raised by the NRAI in its petition in 2022. Last month, Swiggy mentioned the CCI case in the Red Herring Prospectus for its Initial Public Offering. The IPO closed on Friday. While ordering the investigation in April 2022, CCI had said that “prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the RPs vis-à-vis the private brands/ entities which the platforms may be incentivized to favour”.

As per the April 2022 order, the preferential treatment accorded to the Restaurant Partners (RPs) in which these platforms have an equity or revenue interest can create barriers for the existing RPs 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,” it had said.

Among others, the watchdog had said that price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate wide restrictions where the RPs are not allowed to maintain lower prices or higher discounts on any of their own supply channel or on any other aggregator so that the minimum price or maximum discounts can be maintained by the platform.

[with PTI inputs]

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