Zomato, Swiggy face CCI probe over allegations of favouring big chains

The CCI found that Zomato signed 'exclusivity contracts' for lower commissions, while Swiggy promised business growth to restaurants listing exclusively on its platform

The Competition Commission (CCI) of India has found that food delivery giants Zomato and SoftBank-backed Swiggy breached competition laws by favouring certain restaurant chains through exclusive business arrangements, according to documents reviewed by news agency Reuters.  

 

The investigation revealed that Zomato signed ‘exclusivity contracts’ with partners in exchange for reduced commission rates, while Swiggy assured business growth to selected restaurants if they committed to listing exclusively on its platform. These practices, the CCI’s investigation arm noted, hinder fair competition in the food delivery market.  

 

“Exclusivity arrangements between Swiggy, Zomato, and their respective restaurant partners prevent the market from becoming more competitive,” the CCI stated.  

 

The antitrust investigation, launched in 2022, followed a complaint by the National Restaurant Association of India, which alleged that the platforms’ practices adversely affected food outlets.  

 

Both Swiggy and Zomato have transformed food delivery in India, leveraging the country’s smartphone boom and a surge in online ordering to list hundreds of thousands of restaurants. However, the CCI documents mentioned that their requirement for price parity — ensuring restaurants cannot offer lower prices on rival platforms — has further stifled competition and squeezed restaurant margins.

 

Swiggy, which is in the final stages of closing bids for its $1.4 billion initial public offering (IPO) — India’s second-largest this year — and Zomato now face heightened scrutiny as the CCI leadership reviews the investigation findings to determine potential penalties or changes to their business practices.  

 

The final decision could take weeks, and both companies retain the option to contest the findings with the CCI.