CCI Finds Swiggy, Zomato in Violation of Antitrust Laws Over Exclusive Deals with Restaurants
In confidential findings, the Competition Commission of India (CCI) has reported that food delivery giants Swiggy and Zomato are in breach of Indian antitrust laws, as per documents cited by Reuters. The CCI’s probe revealed that both companies engaged in exclusivity agreements that hindered competition in the food delivery market. Zomato reportedly entered “exclusivity contracts” with restaurant partners in exchange for lower commissions. At the same time, Swiggy is alleged to have promised accelerated business growth to restaurants that agreed to list exclusively on its platform.
The investigation, initiated in 2022 following a complaint from the National Restaurant Association of India (NRAI), suggests that these practices may prevent market competitiveness by restricting opportunities for other players. Swiggy informed the CCI that it had phased out its “Swiggy Exclusive” program in 2023 but hinted at plans to introduce a similar program, “Swiggy Grow,” targeting non-metro areas. CCI’s documents noted that Swiggy had also threatened some restaurant partners with lower rankings if they failed to maintain price parity. At the same time, Zomato allegedly imposed price and discount controls, penalizing non-compliant partners.
With the CCI’s findings disclosed to Swiggy, Zomato, and NRAI in March 2024, the companies now have the option to contest the investigation’s conclusions. As Swiggy prepares for its upcoming IPO, its prospectus warns that non-compliance with the Competition Act could lead to substantial fines, marking a potential financial risk amid regulatory scrutiny.
Pic Courtesy: google/ images are subject to copyright
