The investigation by CC revealed that Swiggy threatened partner restaurants that “their rankings will be pushed down if they do not maintain price parity”
The competition commission of India (CCI) found food delivery giants Zomato and Swiggy, guilty of violating competition laws, according to Reuters report. The antitrust body’s investigation revealed the companies had a deal with partner restaurants listed on their platforms, which restricted competition.
According to the documents studied by Reuters, Swiggy favoured certain restaurant partners and ensured their business growth. Similarly, Zomato signed “exclusivity contracts” with partners in exchange for low commissions. Moreover, Deepinder Goyal founded a food delivery platform that imposed pricing and discount restrictions on restaurants and reserved “penal provision” in some cases of non-compliance.
Followed by a complaint from the National Restaurant Association of India, CCI began its probe in 2022 regarding the consequences of anti-competitive practices adopted by the giants in restaurants.
CCI’s investigation revealed that Swiggy threatened partner restaurants that “their rankings will be pushed down if they do not maintain price parity”.
Although the documents on which Reuters report is based are not there in the public domain, it is likely to impact the food delivery giants severely, especially Swiggy as it inches closer to its $1.4 billion initial public offering (IPO) and makes its Dalal street debut. Moreover, CCI’s report mentioned that “any breach of the provisions of the Competition Act, may attract substantial monetary penalties”.
Consequently, Zomato’s shares nosedived by nearly 3 per cent to settle at Rs 247 on the national stock exchange (NSE).
E-commerce has been under CCI’s radar for some time now
The move by the antitrust body comes around a time when a similar crackdown has been done on other e-commerce platforms. E-commerce giants Flipkart and Amazon too have come under CCI’s scanner for favouring certain sellers on their platforms. The antitrust body accused the two companies of building an ecosystem “wherein no seller other than its preferred seller can survive”. Reportedly, it included exclusive product launches on the e-commerce giants' platforms, particularly by smartphone companies like Samsung, Xiaomi, Motorola, Realme and OnePlus.
Earlier in August, the commerce minister Piyush Goyal accused global e-commerce giant Amazon and other such platforms for their discounted prices compared to retail prices.
“Are we going to cause huge, social disruption with this massive growth of e-commerce? I don’t see it as a matter of pride that half our market may become part of the e-commerce network 10 years from now; it is a matter of concern,” said Goyal.