Digital Scoop India Official Platform of Digital Scoop India Featuring Latest & Best News #Articles #Bytes #Entertainment #DigitalScoopMagazine
Related Articles
The Competition Commission of India (CCI) has reportedly found food delivery giants Swiggy and Zomato in breach of the country’s competition and antitrust laws. According to non-public documents obtained by Reuters, the CCI alleges that both companies have engaged in practices that favor certain restaurants on their platforms, undermining fair competition.
The investigation focuses on the business arrangements between Zomato and Swiggy with restaurant partners, particularly exclusivity contracts and pricing mechanisms that hinder the market from becoming more competitive. Zomato, according to the CCI’s findings, has entered into “exclusivity contracts” with certain restaurants in exchange for lower commissions, giving these restaurants preferential treatment on its platform. Meanwhile, Swiggy is accused of offering swift business growth to select partners if they agree to list exclusively with the platform, a practice that the CCI claims also stifles competition.
The CCI’s probe into these practices began in 2022, prompted by a complaint from the National Restaurant Association of India (NRAI). The association raised concerns about the negative impact of such practices on food outlets across the country, particularly small restaurants that may not have the leverage to negotiate similar terms with the platforms.
In its findings, the CCI pointed out that the exclusivity agreements between the food delivery platforms and their restaurant partners reduce market competition and could potentially lead to monopolistic behavior. Despite this, both Zomato and Swiggy have denied the allegations, with Swiggy noting that it phased out its “Swiggy Exclusive” program in 2023. However, Swiggy is reportedly planning to introduce a similar program called “Swiggy Grow” aimed at non-metropolitan areas.
The CCI also revealed that some restaurant partners of Swiggy had been threatened with lower rankings on the platform if they failed to maintain price parity. Zomato, on the other hand, has reportedly imposed restrictions on pricing and discounts for its restaurant partners, and in some cases, applied “penal provisions” for non-compliance.
These revelations have raised concerns within the food delivery industry, with the possibility of significant fines looming over both companies if the CCI concludes that they have violated India’s Competition Act. The issue is also highlighted in Swiggy’s IPO prospectus, where the company acknowledges the potential risks posed by the ongoing antitrust investigation.
As the investigation continues, the CCI’s findings could lead to stricter regulations and possibly major consequences for the business practices of Zomato and Swiggy. The outcome of this probe could reshape the competitive landscape of the Indian food delivery market, with far-reaching implications for both platforms and their restaurant partners.
The documents from the CCI, which were sent to Swiggy, Zomato, and the NRAI in March 2024, have not been made public due to confidentiality rules, but their contents could become central to the ongoing debate on fair competition in the food delivery sector.
Sources By Agencies
