An investigation by the Competition Commission of India (CCI) has revealed that food delivery firms Zomato and Swiggy have violated antitrust norms by getting into “exclusive arrangements” with restaurant partners, a person aware of the details said.
The antitrust regulator’s investigation wing has reckoned that the practice of favouring select restaurants by both Zomato and Swiggy is distorting competition in the market, the person told ET.
Both the firms are accused of forcing their restaurant partners to maintain price parity and, in some cases, asking them not to offer lower prices on rival platforms, he said. “All these things hamper competition in the relevant market and that’s what the investigation report essentially points out,” he added.
The regulator is now reviewing the probe report and will likely take a decision on the matter in a few weeks, the person said.
Swiggy, which closed its bid for a ₹11,327-crore initial public offering (IPO) on Friday, had listed the CCI case as among the internal risks in its IPO prospectus. Its IPO has been oversubscribed more than three times.
Zomato, which launched its IPO in 2021, has a market cap of ₹2.2 lakh crore as on Friday.
The CCI initiated investigation against these firms in 2022 after the National Restaurant Association of India complained about their “anti-competitive practices” in September 2021.
Queries sent to Zomato and Swiggy didn’t elicit any response until the time the paper went to the press.
The restaurants that got into “exclusivity contracts” with these food delivery firms were allegedly granted special favours like lower commission fees, better visibility, or promises of sustained growth.
The antitrust regulator’s probe findings were shared with Zomato, Swiggy and the restaurant association in March 2024 for their response, the person cited above said.
Zomato-owned Blinkit and Swiggy’s Instamart are among a host of quick commerce players that are staring at heightened antitrust scrutiny.
In September, the Department for Promotion of Industry and Internal Trade referred a complaint against quick commerce players – filed by All India Consumer Products Distributors Federation with commerce and industry minister Piyush Goyal – to the competition regulator.
NRAI seeks full CCI report
In response to ET queries, the NRAI said it approached the Delhi High Court earlier this month to ask the CCI to obtain the full investigation report, as it had received a “redacted” report in March.
The CCI usually sends redacted reports where it feels sharing certain commercial details, obtained for the purpose of investigation, would expose trade secrets of the companies concerned to the complainants and others.
NRAI president Sagar Daryani, the President of NRAI said, “NRAI has been consistently raising the issue of anti-competitive and predatory practices of the food delivery aggregators for the last few years.” “I hope that CCI will also speed up the investigation on the other issues raised by the NRAI in its (subsequent) petition in 2022.”
