The Competition Commission ordered a detailed probe against food delivery platforms Zomato and Swiggy for alleged unfair business practises with respect to their dealings with restaurant partners.
The order has come on a complaint filed by the National Restaurant Association of India (NRAI). The watchdog’s probe arm, the Director General (DG), will investigate the case.
The regulator said that “prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the RPs vis-a-vis the private brands/entities which the platforms may be incentivized to favour.”
The Competition Commission of India (CCI) said both Zomato and Swiggy operate as major intermediary platforms in the food delivery space, underscoring their market power and ability to adversely as well as appreciably affect the level playing field, the Competition Commission of India (CCI) said.
It also noted that special treatment accorded to the Restaurant Partners (RPs) in which these platforms have equity or revenue interests can create barriers for the existing RPs to compete on fair terms.
Such preferential treatment can be achieved in various ways given the platform’s control over different aspects that influence competition on them, including control over deliveries, search rankings, etc., which can only be examined appropriately in an investigation, it said.
Besides, the anti-trust regulator said the price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate wide restrictions where the RPs are not allowed to maintain lower prices or higher discounts on any of their own supply channels or on any other aggregator, so that the minimum price or maximum discounts can be maintained by the platform.
Such a price parity clause may discourage the platforms from competing on a commission basis, as RPs need to maintain similar prices on all platforms and provide similar prices to the customers, regardless of the commission rates paid to the platform.
Given that Zomato and Swiggy are the two biggest platforms present in the food delivery segment, their respective agreements with RPs of this nature are likely to have an AAEC on the market by way of creating entry barriers for new platforms without accruing any benefits to consumers, CCI said in a 32-page order. AAEC refers to an “Appreciable Adverse Effect on Competition” (AAEC).