CCI orders probe into ‘conduct of Swiggy, Zomato’

The investigation comes after a complaint by the National Restaurant Association of India (NRAI) over alleged anti-competitive practices.

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New Delhi: The Competition Commission of India (CCI) on Monday ordered a probe into the operations and business models of Swiggy and Zomato, the two major food delivery aggregators, over alleged violations of Section 3(1) and 3(4) of the Competition Act.

The investigation comes after a complaint by the National Restaurant Association of India (NRAI) over alleged anti-competitive practices. The association also said both Swiggy and Zomato, has more than 90 percent market share of the food delivery industry in India.

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CCI asked its director general to conduct a detailed inquiry and submit a report within 60 days. The order copy of the CCI said, “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.”

NRAI, which represents at least 50,000 restaurants, had last year on July approached CCI. It had alleged, “During the (Covid-19) pandemic, the magnitude of anti-competitive practices of Zomato and Swiggy have increased manifold and despite numerous discussions with them, these deep funded marketplace platforms are not interested in alleviating concerns of the restaurants.”

The NRAI alleged that the aggregators indulge in “deep discounting, exclusive tie-ups and preferential treatments of restaurant partners in violation of the country’s competition rules, which also impacts the business of restaurants as well as inhibits the entry of new players into the market”.

The CCI also noted that Swiggy and Zomato running cloud kitchens/private label brands on their platforms calls for an investigation. The fair practice regulator further noted that NRAI’s complaint that the restaurants are not allowed to list the food items either on their own website or on other third-party platforms at lower prices is a matter that needs to be probed. However, the restaurant body’s complaints of delayed payments and one-sided clauses may not have importance in the present probe.

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