Reports suggest that the Competition Commission of India (CCI) has found evidence that leading food delivery companies Zomato and Swiggy have violated antitrust regulations. The findings follow a comprehensive investigation by the CCI to observe possible monopoly practices that these dominant players in the fast-growing online food delivery market in India have exploited.
The CCI investigation said it had prima facie found Zomato and Swiggy to be “anti-competitive, the investigation pointed out some restrictive agreements the companies may be enforcing on partner restaurants for exclusivity and may limit consumer choice and choice/price transparency.”. According to documents, Zomato and Swiggy coerced restaurants into entering exclusive agreements that would deny them space to shift elsewhere if they wanted to join competing platforms to strengthen their stranglehold on market dynamics and customer reach. It was also pointed out during the investigation that such “exclusivity” could become a barrier for smaller players to enter and expand.
The CCI probe also focused on commission and discount structuring on Zomato and Swiggy. Reports suggest that the commission fees companies are charging them along with strategic discounting practices, too, might have hurt the smaller restaurants using these platforms for visibility and customer acquisition. Forcing them to stick to tight pricing policies and commission structures, one can say that the platforms have restricted the competitors of small businesses and helped them tighten their stronghold in the market.
Zomato and Swiggy both responded to this discovery, saying they would cooperate fully with this probe by the CCI. According to a representative of one of the platforms, the company remained committed to fair marketplace practices while still looking forward to regulatory guidelines. Both companies continued to say that the models remained beneficial to customers as well as restaurant partners, considering that they provide a diverse food delivery proposition to more people, driving business growth.
As the CCI moves ahead, it is likely that penalties or modifications in the business models of Zomato and Swiggy will be imposed for a level playing field. This ruling would potentially change the game of competition for online food delivery firms in many respects and would influence how the platforms approach their restaurant partners as well as how they treat consumers.
The findings come at a time when regulatory scrutiny of large digital platforms is gaining traction in India, underlining the intent of the government to ensure fair play. The conclusions that the CCI draws may ultimately lead to such changes in policy measures which can help instill greater transparency, encourage the rights of smaller businesses, and enhance consumer choice in the new digital marketplace.
