The Competition Commission of India (CCI) on Monday ordered a probe into the conduct of Zomato and Swiggy. This comes after the National Restaurant Association of India (NRAI) had last year approached CCI against the alleged “anti-competitive” practices of the platforms. The competition watchdog has directed the Director General to submit a report within 60 days..
“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 to determine whether the conduct of the Ops (Zomato and Swiggy) have resulted in contravention of the provisions of Section 3(1) of the Act read with Section 3(4) . The DG is, thus, directed to carry out a detailed investigation, in terms of Section 26(1) of the Act, and submit a report to the Commission, within 60 days from the date of receipt of this order,” it stated.
Last year, the industry body had alleged practices such as deep discounting, data masking and violation of platform neutrality by the food aggregator platforms were having an adverse impact on fair competition.
“After careful perusal of the allegations as well as the submissions made by the parties, the Commission is of the view that prima facie a conflict of interest situation has arisen in the present case, both with regard to Swiggy as well as Zomato, because of the presence of commercial interest in the downstream market, which may come in the way of them acting as neutral platforms. This requires a detailed examination,” the CCI’s order stated.
It said that detailed scrutiny is warranted on the impact on the overall competition between the restaurant partners and the private brands or cloud kitchens and such arrangements whereby preferential treatment is accorded to some entities.
“Preferential treatment accorded to the restaurant partners in which these platforms have an equity or revenue interest can create barriers for the existing RPs to compete on fair terms. Such preferential treatment can be through various ways given the platform’s control over different aspects that influence competition on them, including control over deliveries, search ranking etc. which can only be examined appropriately in an investigation,” CCI added.
Price parity agreements
The investigation will also look into issues of price-parity agreements and whether exclusive agreements with restaurant partners in conjunction with minimum guarantee obligations prevents competition on merits.
NRAI had alleged that the platforms have price parity agreements with restaurant partners that do not allow them to develop their own direct ordering channels reducing inter-platform competition.