India’s anti-monopoly watchdog has ordered an investigation against food delivery apps Zomato and Swiggy over suspected discriminatory pricing practices and other issues raised in a restaurant association complaint last year.
The National Restaurant Association of India (NRAI), which represents over 500,000 restaurants, filed a complaint with the Competition Commission of India (CCI) in July 2021, alleging that food delivery companies were engaging in anti-competitive actions.
Now, the CCI has asked its Director General to submit a report within 60 days.
The order said: “The Commission is of the view that a prima facie case exists with respect to certain conduct of Zomato and Swiggy, which requires an inquiry by the Director General (DG), to determine whether… (they have)) resulted in contravention of the provisions of section 3(4) read with section 3(1) of the Act.”
NRAI had complained that Swiggy and Zomato were imposing terms of deep discounts, data masking, exorbitant commissions and price parity on restaurant partners.
According to NRAI, restaurant aggregators have also resorted to dual role play on their platform, where they list their own cloud kitchen brands exclusively similar to private labels, thus creating an inherent conflict of interest.
Referring to the launch of private labels by aggregators, which may lead them to act as middlemen and market participants, the CCI said that a conflict of interest has arisen.
It is also said that this is due to the presence of business interest in the downstream market, which may prevent them from acting as a neutral platform.
The CCI also noted that Zomato had discontinued its cloud kitchen service Access Kitchen last year, the fact that these third-party-owned cloud kitchens, through orders and rents on commission, led to a call for investigation. It has ‘revenue interest’ through the medium. investigation.
However, NRAI said that operating parties often encourage restaurant partners to commit exclusively to the respective platform. In response, the CCI said it would investigate the issue of “platform neutrality” against food-tech companies.
During the course of investigation, it may also be seen whether the exclusivity with minimum guarantee obligation is further stressing the structure, which may prevent the platform from operating in a neutral manner, noted the CCI.
The CCI will also look into NRAI’s allegations about ‘price parity’ arrangements, which have been followed by Zomato and Swiggy. The competition regulator found that restaurant partners were not allowed to maintain low prices on aggregators, which could impact the competitive market by creating barriers.
With regard to the allegation of service bundling, the Commission observed that no competition concerns arise from linking food delivery services with food ordering services.
The restaurant partner intends to make additional submissions on the dropped charges.
read all breaking news , today’s fresh news And IPL 2022 Live Updates Here.