Zomato and Swiggy, India’s largest food delivery platforms, are currently facing increased scrutiny. A Competition Commission of India (CCI) investigation has revealed law violations by both companies, allegedly aimed at favouring select restaurants. The CCI submitted its report on these findings to Zomato, Swiggy, and the complainant group of restaurants in March 2024.
The CCI inquiry was initiated following a complaint by the National Restaurant Association of India (NRAI), which claimed that Zomato and Swiggy’s business strategies were unfairly impacting restaurants.
According to a Reuters report, CCI documents indicate that Zomato had entered exclusive agreements with certain restaurants in exchange for reduced commission rates. Similarly, it was revealed that Swiggy assured some restaurants that their business would grow if they remained exclusively listed on its platform.
Also Read | Swiggy's IPO subscribed 3.59 times on last day.
The CCI’s report highlights that exclusive agreements between Swiggy, Zomato, and their restaurant partners hinder competition in the market. The report also notes that Swiggy informed investigators that it had discontinued its "Swiggy Exclusive" programme in 2023. However, the company is now planning to introduce a similar initiative, "Swiggy Grow," in other cities.
Following the Reuters report, Zomato’s shares dropped by 3%. Swiggy’s IPO prospectus lists the CCI case as an internal risk. Both companies could face substantial financial penalties if found in violation of the Competition Act.
In recent years, both Swiggy and Zomato have pressured restaurants to maintain price parity across platforms, which the CCI documents indicate has directly reduced competition. Additionally, restaurants were prevented from offering lower prices on other online platforms, further limiting market competition.