food Delivery platforms Zomato and Swiggy term the news of violation of competition rules as misleading. Recently, media reports stated that the Competition Commission of India i.e. CCI has held Zomato and Swiggy guilty of violating competition norms i.e. competition laws.
Zomato said in a statement that it has been under CCI investigation since April 2022, under which the Director General of CCI was required to investigate the matter further.
Zomato also informed that no final order has been issued by the CCI yet. The Company will continue to cooperate with CCI to defend its practices. Zomato has said that the matter was placed before the stock exchange in April 2022 only after the CCI's initial order.
Zomato said that, while the media report is completely misleading, its modus operandi is fully compliant under Indian competition laws and does not harm any competition.
Media reports of CCI probe misleading: Swiggy Swiggy said in the statement, “Media reports of the CCI inquiry are misleading and confusing the inquiry process with the final outcome.” Pursuant to the CCI order dated April 5, 2022, the Director General examined certain aspects of our business operations.
Its inquiry and report in March 2024 is a preliminary step in the probe being conducted by the CCI and not a final decision as some reports suggest. We have disclosed all the details of the case in the company's DRHP public filing filed on September 26, 2024.
Swiggy is yet to receive any information on results from CCI to file feedback on DG results. Once Swiggy submits its response and the CCI hears the case, the CCI will issue its verdict on whether any competition laws have been violated.
The Competition Commission had ordered a probe against Zomato and Swiggy in April 2022.
Committed to complying with existing laws of the country Currently it is in the initial stage and no final decision or order has been issued regarding the operation of Swiggy after 2022. Swiggy is fully cooperating with the investigation and is committed to complying with the current laws of the country.
According to media reports, the CCI investigation found that Zomato and Swiggy were involved in unfair business practices. CCI has also said that both platforms were giving preferential treatment to some restaurant partners.
The Competition Commission had ordered a detailed inquiry against the two companies in April 2022 and the inquiry report was submitted to the regulator i.e. CCI earlier this year.
As per the rules, the CCI Director General's report has been shared with both the companies and they will be summoned for hearing by the commission later. CCI will pass after consideration and clarification of each.
NRAI filed a complaint against Zomato-Swiggy The decision to probe Zomato and Swiggy was based on a complaint filed by the National Restaurant Association (NRAI). According to media reports, the investigation found that both Zomato and Swiggy were involved in anti-competitive practices. Both companies were giving special treatment to some restaurant partners. The report was submitted to the regulator earlier this year.
NRAI said it has reviewed the revised investigation report sent in March 2024. “To protect the interests of the market, we recently filed a petition in the High Court in November 2024 requesting the CCI to provide us with access to the full report,” the association said in a statement.
Swiggy told about CCI case in RHP of IPO NRAI president Sagar Daryani has expressed hope that the CCI will also expedite the probe in 2022 on other issues raised by the NRAI in its petition. Last month, Swiggy mentioned the CCI case in the red herring prospectus for its initial public offering i.e. IPO. Swiggy's IPO closed on Friday, November 8.
The National Restaurant Association of India has expressed concern that both food delivery platforms Zomato and Swiggy are doing things that could prevent competition in the food delivery market. This violation focuses on exclusive contracts with restaurants.
Swiggy is accused of giving more opportunities for promotions only to restaurants listed on its platform, while Zomato is said to have cut commissions for restaurants entering into similar 'exclusive contracts'.
Both other food aggregators and consumers may suffer: CCI According to CCI's investigation unit, these actions are preventing the market from becoming more competitive, potentially hurting both other food aggregators and consumers.
Both companies have come under scrutiny as they dominate the Indian food delivery landscape, raising concerns about their market power and impact on smaller competitors and restaurant owners.
Now the results of the CCI investigation are awaited, as these results could have a major impact not only for Swiggy and Zomato but also for the ecosystem of online food delivery services in India.
Image Credit: (Divya-Bhaskar): Images/graphics belong to (Divya-Bhaskar).
