New Delhi: In July of last year, the National Restaurants Association of India (NRAI), which has over 50,000 bodies under its umbrella, had filed a complaint against food delivery apps Zomato and Swiggy, alleging delayed payment cycles, data masking, imposition of one-sided clauses, and exorbitant commissions. Further, they had also accused the food aggregator platforms of conflict of interest as they themselves also ran a few cloud kitchens that sell on the platform.
Based on the complaint, the Competition Commission of India (CCI), a national anti-trust watchdog, has ordered an investigation into the business practices of both Zomato and Swiggy, amidst NRAI accusations of “increasing predatory behaviour” by the food aggregators. The CCI said it is of the view that there exists a prima facie case with respect to the conduct of Zomato and Swiggy, which requires an investigation by the CCI Director General, to determine whether the conduct of these platforms has resulted in contravention of the Competition Act, 2002.
“The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the director general (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions,” the CCI noted, according to the report.
The NRAI has welcomed the probe ordered by CCI. The association said it is happy that CCI “saw merits in our submission which highlighted restaurant industry’s concerns”.
“It may be noted that the NRAI has been engaging with both the aggregators and the concerned government authorities in the past few years to resolve existing pain points of the Industry vis-à-vis operations of the aggregators. These pain points were acutely amplified during the pandemic when restaurants and cloud kitchens were struggling for survival by way of their increased dependence on these aggregators,” CCI said in a statement, stated the report.
Zomato has said that CCI wants to look into its trade practices such as preferential listing of restaurant partners and pricing parity and has prima facie not found concerns with respect to their independence on levy of commissions or alleged bundling of services, media reports said.
“We will continue to work closely with the Commission to assist them with their investigation and explain to the regulator why all of our practices are in compliance with competition laws and do not have any adverse effect on competition in India. We intend to promptly comply with any recommendations given to us by the Commission,” the food delivery and restaurant discovery platform said in a statement on April 5, Moneycontrol reported.
The NRAI had also accused Zomato and Swiggy of charging “unviable” commissions that “are to the tune of 20 percent to 30 percent, which are extremely exorbitant”.
Zomato was accused of charging approximately 27.8 percent of the order value from the restaurants listed on its platform. For cloud kitchens, the commission rate is as high as 37 percent, the complainant had claimed.
In response to the CCI order, Zomato has said that only one percent of restaurant partners listed on its platform are exclusive to it, the Moneycontrol report stated.
India Blooms News Service