The Competition Commission of India (CCI) has ordered an investigation against top food delivery platforms, Zomato and Swiggy. CCI ordered the probe over the illegal and unfair business practices regarding their dealings with restaurant partners.
The Director-General of CCI will investigate the issue within 60 days. In July 2021, the National Restaurant Association of India (NRAI) filed a complaint with the CCI claiming anti-competitive activities by meal delivery services.
Swiggy and Zomato have already refuted the charges in CCI submissions, both secret and non-confidential. According to NRAI, Swiggy and Zomato engaged in deep discounting, data masking, excessive fees, and forcing price parity requirements on restaurant partners.
Several restaurants have also accused the food delivery companies of acting in a dual capacity. NRIA says that Zomato and Swiggy promote their exclusive cloud kitchens more extensively and are akin to private labels.
CCI inferred in their statement that the private labels initiated by the aggregators make them act like intermediaries. They made a statement after looking into the allegations and submissions made by NRIA. It addressed that this is an issue of conflict of interest, and the platforms cannot stay neutral due to commercial benefits.
Zomato has closed its cloud kitchen called ‘access kitchen’ last year because of revenue stakes. CCI added that rent for the third party owned cloud kitchens calls for some examination
Restaurant partners were not permitted to retain lower rates on the aggregators, according to the CCI. It might influence the competitive market by establishing obstacles.
