CCI Orders Investigation into Practices of Swiggy and Zomato, Seeks Report Within 60 Days

India’s anti-monopoly watchdog has ordered a probe in opposition to meals supply apps Zomato and Swiggy for suspected discriminatory pricing practices and different points raised in a grievance by a eating places’ affiliation final 12 months.

The National Restaurants Association of India (NRAI), which represents over 500,000 eating places, filed a grievance with the Competition Commission of India (CCI) in July 2021, stating that meal supply firms had been partaking in anti-competitive actions.

Now, the CCI has requested its director-general to submit a report inside 60 days.

The order acknowledged: “The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the director-general (DG), to determine whether … (they have) ) resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) thereof.”

NRAI companions had that Swiggy and Zomato had been indulging in deep discounting, knowledge masking, exorbitant commissions and imposing value parity phrases on restaurant.

The restaurant aggregators, in keeping with NRAI, have additionally resorted to taking part in a twin position on their platform the place they checklist their very own cloud kitchen manufacturers solely, just like personal labels, thus creating an inherent battle of curiosity.

While referring to the aggregators’ launch of personal labels, which might result in them appearing as intermediaries and market individuals, the CCI mentioned {that a} battle of curiosity state of affairs has arisen.

It can be mentioned that that is as a result of presence of economic curiosity within the downstream market, which can stop them from appearing as impartial platforms.

The CCI additionally famous that whereas Zomato shut down its cloud kitchen service Access Kitchen final 12 months, the truth that it has a ‘income curiosity’ in these third-party-owned cloud kitchens, via commissions on orders and lease, requires scrutiny and additional investigation.

However, NRAI acknowledged that working events steadily induce restaurant companions to commit solely to the respective platform. In response, the CCI acknowledged that it will examine the problem of “platform neutrality” against food-tech companies.

During the investigation, it may also be seen whether exclusivity in conjunction with a minimum guarantee obligation is further emphasizing the structure, which may obstruct the platform from operating in a neutral manner, noted the CCI.

The CCI will also look into NRAI’s regarding ‘price parity’ arrangements, which were followed by Zomato and Swiggy. The competition regulator observed that restaurant partners were not permitted to maintain lower prices on the aggregators, which could have an impact on the competitive market by creating barriers.

Concerning the allegation of service bundling, the commission stated that ‘bundling’ of food delivery services with food ordering services does not appear to raise any competition concerns.

The restaurant partners intend to make additional submissions on the dropped.

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