Will explain to CCI that we are not anti-competition, says Zomato

Competition watchdog to probe Swiggy and Zomato for alleged unfair practices with respect to pricing and listing of restaurants on their platforms

A day after the Competition Commission of India ordered a probe into food delivery majors Zomato and Swiggy’s practices on pricing and listing of restaurants, Zomato said in a regulatory filing that it will explain to the competition watchdog that it is in compliance with relevant laws.

“We will continue to work closely with the Hon'ble Commission to assist them with their investigation and explain to the regulator why all of our practices are in compliance with competition laws and do not have any adverse effect on competition in India,” Zomato said in a regulatory filing.

“We intend to promptly comply with any recommendations given to us by the Hon'ble Commission,” it added.

Meanwhile, restaurant body National Restaurant Association of India (NRAI) has said that It has been engaging with both the aggregators and the concerned government authorities in the past few years to resolve existing pain points of the industry.

“These pain points were acutely amplified during the pandemic when restaurants and cloud kitchens were struggling for survival by way of their increased dependence on these aggregators,” it added.

The CCI order came after NRAI filed a complaint with the antitrust watchdog in July last year, highlighting issues related to the functioning of food aggregator platforms which it claims should “ideally operate as a neutral marketplace”.

The watchdog's probe arm -- Director General (DG) -- will investigate the case and submit a report in the matter within 60 days. The competition regulator said on Monday that "prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the RPs vis-à-vis the private brands/entities which the platforms may be incentivised to favour".

CCI said allegations such as delayed payment cycle, imposition of one-sided clauses and exorbitant commission require investigation.

Both Zomato and Swiggy operate as major intermediary platforms in the food delivery space, underscoring their market power and ability to adversely as well as appreciably affect the level playing field, the Competition Commission of India said.

It also noted that preferential treatment accorded to the Restaurant Partners (RPs) in which these platforms have an equity or revenue interest can create barriers for the existing RPs to compete on fair terms.

"Such preferential treatment can be through various ways given the platform's control over different aspects that influence competition on them, including control over deliveries, search ranking etc. which can only be examined appropriately in an investigation," it said.

Besides, the anti-trust regulator said the price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate wide restrictions where the RPs are not allowed to maintain lower prices or higher discounts on any of their own supply channel or on any other aggregator, so that the minimum price or maximum discounts can be maintained by the platform.