New Delhi: The Competition Commission on Monday ordered a detailed probe against food delivery platforms, Zomato and Swiggy, for alleged unfair trade practices in relation to their dealings with restaurant partners. This order has come on the complaint of National Restaurant Association of India (NRAI).
The investigation wing of the watchdog – the Director General (DG) – will investigate the matter. The regulator said that “there exists a prima facie conflict of interest necessitating a detailed examination of its impact on the overall competition among RPs, along with private brands/entities in whose favor the platform may be promoted”.
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The Competition Commission of India (CCI) said that both Zomato and Swiggy serve as major intermediary platforms in the food delivery sector, underlining their market power and ability to adversely affect an equal level playing field. It also noted that preferential treatment given to restaurant partners (RPs) that have equity or revenue interest in these platforms may create a barrier for existing RPs to compete on fair terms.
It said, “Such preferential behavior can occur in a variety of ways given the platform’s control over various aspects that affect competition over them, including control over delivery, search rankings, etc. can be done appropriately.”
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Further, the anti-trust regulator said that the price parity clauses mentioned in Zomato and Swiggy’s agreements indicate broad restrictions where RPs are not allowed to maintain low prices or high discounts on their own supply channel or any other aggregator. Is. , so that the minimum price or maximum discount is maintained by the Platform.
“Such price parity clauses may discourage platforms from competing on a commission basis as the RP is required to maintain the same prices across all platforms and provide the same value to customers, regardless of the commission rates charged by the platform. payment has been made.” Given that Zomato and Swiggy are the two largest platforms present in the food delivery segment, AAEC in the market by creating entry barriers for new platforms, without earning any benefit to the consumers from their respective agreements with such RPs. is likely to happen,” the CCI said in a 32-page order.
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AAEC refers to Appreciable Adverse Effect on Competition (AAEC).
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