The Competition Commission of India (CCI) has identified anti-competitive practices within two major platforms, Zomato and Swiggy, which have dominated the country’s food delivery landscape. The investigation, prompted by a 2022 complaint from the National Restaurant Association of India, found that both companies engaged in business practices that skewed competition in favour of select restaurant partners.
CCI contends that Zomato and Swiggy have structured their partnerships in ways that suppress broader competition in the food delivery market. Zomato allegedly secured “exclusivity contracts” with certain restaurants by offering lower commission rates in return for exclusivity. This arrangement effectively limited these restaurants from collaborating with competing platforms, tightening Zomato’s market grip.
Swiggy, meanwhile, reportedly guaranteed increased business visibility for restaurants that agreed to list solely on its platform, further consolidating its influence.
These exclusive agreements were criticised by the CCI’s investigation arm, which noted that such deals limit options for consumers and unfairly advantage a handful of restaurant partners, leaving smaller outlets and independent eateries struggling for equal visibility.
The report highlights that these exclusivity clauses ultimately stifle competitive growth in the sector, impeding opportunities for new and smaller entrants.
Apart from exclusivity, Zomato and Swiggy have also allegedly imposed restrictions on pricing strategies. Documents seen by Reuters reveal that Zomato has pressured restaurant partners to keep prices and discounts uniform across platforms. Failure to comply with these stipulations reportedly led to “penal provisions” that could adversely impact the restaurant’s placement on the app.
Swiggy has allegedly followed a similar approach, coercing restaurants into maintaining price parity by threatening to reduce their visibility if they didn’t comply.
The CCI is in the process of reviewing these findings to determine whether punitive action is warranted. If Zomato and Swiggy are found to have breached the Competition Act, they could face substantial fines, and the CCI may mandate changes to their business models to foster a more competitive market. Both companies still have the option to contest these findings with the CCI.
Swiggy has claimed that its ‘Swiggy Exclusive’ program, which allegedly required exclusivity from partner restaurants, was phased out in 2023. However, it plans to launch a similar ‘Swiggy Grow’ program, targeting non-metropolitan cities in a bit to expand its market reach.
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