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CCI says Zomato, Swiggy in breach of antitrust laws in India: Report
Swiggy and Zomato are reportedly in breach of competition laws, favouring certain restaurants in the country, says a CCI report.
The Competition Commission of India (CCI) said in its non-public documents that food delivery giants Swiggy and Zomato are in breach of the antitrust and competition laws of India, with their business practices favouring select restaurants listed on their platforms, reported Reuters.
The antitrust body's documents say that Zomato entered into "exclusivity contracts" with partners in return for lower commissions. Meanwhile, its top competitor Swiggy reportedly guaranteed swift business growth to some of the players if they listed exclusively on its platform, the report said. HT.com has not independently verified the authenticity of the information.
Exclusivity arrangements between Swiggy, Zomato and their respective restaurant partners "prevent the market from becoming more competitive," the CCI's investigation arm noted in its findings.
CCI commenced its antitrust probe against Swiggy and Zomato in 2022 after the National Restaurant Association of India registered a complaint regarding the impact of anti-competitive practices on food outlets.
The CCI documents, not made public due to confidentiality rules, were sent to both Swiggy and Zomato as well as the NRAI in March 2024, with the findings not previously reported.
Read more: Swiggy IPO vs Zomato share: Which one do analysts recommend?
The CCI report further noted that Swiggy said during the probe that it has phased out its “Swiggy Exclusive” programme in 2023, but is planning to launch a similar programme named Swiggy Grow in non-metropolitan areas.
The CCI investigation also noted that some of Swiggy's partner restaurants were “threatened that their rankings will be pushed down if they do not maintain price parity.”
The CCI case is mentioned as one of the "internal risks" in Swiggy's IPO prospectus, which says "any breach of the provisions of Competition Act, may attract substantial monetary penalties."
Meanwhile, the CCI documents said that Zomato imposed pricing and discount restrictions on restaurant partners, and in some cases included a "penal provision" if the outlet failed to comply.
The final decision could likely take several weeks and the companies still have the option of contesting the investigation findings.
In a statement, Swiggy said, “Media reports of the Competition Commission of India's (CCI) investigation into Swiggy confuse the investigative process with the final outcome and are misleading. Based on the order of the CCI dated April 5, 2022, the Director General investigated certain aspects of the conduct of our business and its inquiry and report of March 2024 is a preliminary step in an ongoing investigation by the CCI, and not a final decision as some reports suggest. We have disclosed all the details of the matter in the company’s Public filing of the DRHP filed on September 26, 2024.”
“Swiggy is yet to receive the confidential details of the findings from the CCI for filing a response to the DG's finding. Once Swiggy submits its response and CCI conducts a hearing on the matter, CCI will pass its decision on whether any competition law violations have occurred,” the food delivery company further said.
(With inputs from Reuters)
