Food Delivery platforms Zomato and Swiggy have termed the news of violation of competition norms as misleading. Recently, it was said in media reports that the Competition Commission of India i.e. CCI has found Zomato and Swiggy guilty of violating competition norms i.e. competition laws.
Zomato said in the 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 CCI yet. The company will continue to cooperate with CCI to defend its practices. Zomato has said that this matter was placed before the stock exchanges in April 2022 only after the initial order of CCI.
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 investigation are misleading: Swiggy
Swiggy said in the statement that media reports of the CCI investigation confuse the investigation process with the final outcome and are misleading. Based on the CCI order dated April 5, 2022, the Director General had investigated certain aspects of our business operations.
Its investigation and report due in March 2024 is an initial step in the investigation 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 public filing of DRHP filed on September 26, 2024.
Swiggy has not yet received any information on the results from CCI to file response on the DG results. Once Swiggy submits its response and the CCI hears the case, the CCI will issue its verdict on whether there has been any competition law violation.
The Competition Commission had ordered an investigation against Zomato and Swiggy in April 2022.
Committed to following the existing laws of the country
At present, it is in the initial stage and no final decision or order has been issued regarding the functioning of Swiggy after 2022. Swiggy is fully cooperating in the investigation and is committed to complying with the existing laws of the country.
According to media reports, CCI has found in the investigation that Zomato and Swiggy have been found involved in unfair business practices. CCI has also said that both the platforms were giving preferential i.e. special treatment to some restaurant partners.
The Competition Commission had ordered a detailed investigation against both the companies in April 2022 and the investigation 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 later be called for hearing by the commission. CCI will pass after everyone's consideration and clarification.
NRAI had filed a complaint against Zomato-Swiggy
The decision to investigate Zomato and Swiggy was taken on a complaint filed by the National Restaurant Association (NRAI). According to media reports, investigation found that both Zomato and Swiggy were involved in anti-competitive practices. Both the companies were giving special treatment to some restaurant partners. The report was submitted to the regulator earlier this year.
NRAI had said that it has reviewed the revised investigation report sent in March 2024. The association said in a statement, '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 access to the complete report.'
Swiggy had told about CCI case in the RHP of IPO.
NRAI President Sagar Daryani has expressed hope that CCI will also expedite investigation in 2022 on other issues raised by NRAI in its petition. Last month, Swiggy had mentioned about the CCI case in the red herring prospectus for its Initial Public Offering i.e. IPO. Swiggy's IPO was closed on 8th November i.e. Friday.
The National Restaurant Association of India had expressed concern that both food delivery platforms Zomato and Swiggy are doing things that can prevent competition in the food delivery market. This violation focuses on exclusivity agreements with restaurants.
Swiggy is accused of giving more opportunities for promotion to restaurants that are listed only on its platform, while Zomato is said to have reduced the commission for restaurants that enter into similar 'exclusive contracts' .
Both other food aggregators and consumers may suffer losses: CCI
According to CCI's investigative unit, these actions are preventing the market from becoming more competitive, potentially harming 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 CCI's investigation are awaited, as these results can leave a big impact not only for Swiggy and Zomato but also on the ecosystem of online food delivery services in India.
Graphics Source: VaskarAssets
