Zomato, Swiggy Breach Competition Rules, CCI Investigation Reveals: Report
Over recent years, Swiggy and Zomato have transformed India's food delivery landscape, with hundreds of thousands of restaurants listing on their platforms amid a surge in smartphone use
An investigation by India's antitrust regulator revealed that food delivery giants Zomato and SoftBank-backed Swiggy violated competition laws by engaging in business practices that favoured restaurant chains listed on their platforms, according to documents reviewed by the news agency Reuters.
The Competition Commission of India (CCI) found that Zomato entered into "exclusivity contracts" with restaurant partners in exchange for lower commissions. Meanwhile, Swiggy offered certain restaurants guaranteed business growth in return for committing to listing exclusively on its platform, as outlined in non-public documents prepared by the CCI, stated in the report.
The CCI's investigation concluded that these exclusivity arrangements between Swiggy, Zomato, and their respective restaurant partners hindered market competition, preventing a more level playing field. The findings, reviewed by Reuters on Friday, suggest that such practices distort the competitive landscape in the food delivery sector.
The documents from the Competition Commission of India (CCI) are not publicly available in accordance with the regulator’s confidentiality rules and were shared with Swiggy, Zomato, and the complainant restaurant groups in March 2024. These findings have not been previously reported.
Zomato, Swiggy, and the CCI have yet to respond to the matter.
The antitrust probe into Swiggy and Zomato was launched in 2022 following a complaint by the National Restaurant Association of India (NRAI) regarding the adverse impact of the platforms' anti-competitive practices on food outlets. Over recent years, Swiggy and Zomato have transformed India's food delivery landscape, with hundreds of thousands of restaurants listing on their platforms amid a surge in smartphone use and online ordering.
In addition to exclusivity agreements, both platforms have pressured restaurants to maintain price parity across competing platforms, effectively reducing market competition. According to the CCI documents, this practice harms restaurants by preventing them from offering lower prices on other online platforms.
The next phase of the CCI's investigation involves a decision by its leadership, which is still reviewing the findings to determine whether to impose penalties or mandate changes to Swiggy's and Zomato's business practices. A final decision could take several weeks, and the companies can challenge the investigation’s conclusions with the CCI.
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