CCI finds Zomato, Swiggy violated competition laws with unfair market practices
India’s antitrust authority, the Competition Commission of India (CCI), has determined that major food delivery platforms Zomato and Swiggy engaged in practices that contravene competition laws, according to internal documents. The CCI’s investigation reveals that these companies favored certain restaurant chains on their platforms through exclusive partnerships, limiting the broader market's competitiveness.
Zomato reportedly secured "exclusivity contracts" with certain restaurants in exchange for reduced commission fees, while Swiggy offered assurances of increased business growth to select partners if they agreed to list only on its platform. These arrangements, highlighted in confidential CCI documents reviewed by Reuters, hinder the development of a competitive market landscape, according to the CCI’s investigative arm.
The documents, not publicly accessible due to CCI’s confidentiality rules, were shared in March 2024 with Swiggy, Zomato, and the concerned restaurant associations. Neither Swiggy, Zomato, nor CCI responded to Reuters' requests for comment.
The probe initially began in 2022, following a complaint by the National Restaurant Association of India, which argued that these platforms' practices were unfairly impacting restaurants. Over the past few years, Swiggy and Zomato have transformed India’s food delivery industry by bringing a vast array of outlets online, coinciding with increased smartphone usage and the growth of online ordering.
Both platforms have also pressured restaurants to maintain price parity across various services, thereby stifling competition by restricting restaurants from offering lower prices elsewhere, according to the CCI's findings.
As Swiggy moves forward with its $1.4 billion IPO, expected to be India’s second-largest this year, the CCI’s next step involves a leadership review of the investigation results. This will determine whether penalties or required changes to business practices are warranted. Swiggy and Zomato may choose to challenge the findings if the CCI decides to impose any measures.
