CCI Finds Zomato, Swiggy violated Antitrust Laws, Documents Show

Swiggy and Zomato, which provide food delivery services through the app, have been found guilty of violating competition laws. An investigation by the Competition Commission of India (CCI) has revealed that the business practices of these companies favor select restaurants listed on their platforms.

One of Reuters Report It has been reported that Zomato had entered into some ‘exclusivity contracts’ by reducing the commission, while Swiggy had guaranteed growth in business only to some restaurants listed on its platform. Non-public documents prepared by CCI say that such contracts between Swiggy, Zomato and some of their restaurant partners hinder the market from becoming more competitive. These documents have been seen by Reuters. CCI had started this investigation about two years ago regarding anti-competition business practices. The investigation was conducted following a complaint by the National Restaurant Association of India.

These documents of CCI have not been made public. These documents were shared with Swiggy, Zomato and the complaining restaurant association in March this year. Zomato declined to comment on this matter. Swiggy and CCI did not respond to queries sent by Reuters. The issue has been referred to as an ‘internal risk’ in the prospectus for the initial public offering (IPO) issued by Swiggy. The CCI report said Swiggy told investigators that the program with the exclusive contract had ended last year. However, Swiggy is planning to launch such a program in non-metropolitan cities.

In the last few years, Swiggy and Zomato have brought a big change in the way we order food from restaurants. Thousands of restaurants are listed on the apps of these companies. In this investigation, it was found that Zomato had imposed restrictions regarding pricing and discounts on the restaurants listed on its platform. In some cases, there was also a provision to impose ‘fine’ if the restaurant failed to follow these restrictions.