CCI to probe Zomato, Swiggy for alleged unfair practices

New Delhi: Competition Commission of India (CCI) on Monday launched a detailed probe against food delivery platforms, Zomato and Swiggy, for alleged unfair business practices with respect to their dealings with restaurant partners.

The order comes months after the National Restaurant Association of India (NRAI) asked the CCI to investigate the companies for breaching platform neutrality by providing priority to exclusive contractors.

"A conflict of interest situation has arisen in the present case, both with regard to Swiggy as well as Zomato ... which may come in the way of them acting as neutral platforms," the CCI said in an order.

The watchdog's probe arm - Director General (DG) - will investigate the case.

The NRAI, which represents more than 5 lakh restaurants across India, also alleged Zomato and Swiggy were misusing consumer data, charged exorbitant commissions, and provided massive discounting.

"The Commission observes that it has already found merit in investigating the issue pertaining to platform neutrality," the CCI said but added that it did not see merits in allegations of delayed payments, "one-sided clauses" and "exorbitant commission etc" being linked to the competition.

Besides, the anti-trust regulator said the 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 supply channel or any other aggregator, so that the minimum price or maximum discounts can be maintained by the platform.

"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. 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 said in a 32-page order.

Swiggy and Zomato did not immediately respond to emails seeking comment.