CCI orders probe against Zomato and Swiggy

The Competition Commission ordered a detailed probe against food delivery platforms, Zomato and Swiggy for alleged unfair business practices with respect to their dealings with restaurant partners and over the platform neutrality concerns raised by the National Restaurant Association of India (NRAI).

The association had claimed that Zomato used consumer data to build cloud kitchens and offered facilities to certain brands for additional fees or rental commissions, guaranteeing minimum revenues to such brands. It also accused Swiggy of similarly benefiting from a portion of sales from private labels, propelling it to divert consumer traffic.

CCI said allegations such as delayed payment cycle, imposition of one-sided clauses and exorbitant commission require investigation. It also said that 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.

CCI said, “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 Appreciable Adverse Effect on Competition (AAEC) on the market by way of creating entry barriers for new platforms, without accruing any benefits to the consumers.”

CCI chairperson Ashok Kumar Gupta had previously said that the commission has urged e-commerce platforms to improve transparency in certain areas of their functioning and that in the absence of self-correction, the CCI may use the “instrumentatily of the law”.