Food delivery platforms Zomato and Swiggy have termed the reports of violation of competition norms as misleading. Recently, it was reported in media reports that the Competition Commission of India (CCI) has found Zomato and Swiggy guilty of violating competition norms i.e. competition laws. Zomato said in the statement that it has been under investigation by the CCI since April 2022, under which the Director General of CCI was required to further investigate the matter. Zomato also said that no final order has been issued by the CCI yet. The company will continue to cooperate with the CCI to defend its way of working. Zomato has said that the matter was placed before the stock exchanges in April 2022 only after the initial order of the CCI. Zomato said that the media report is completely misleading, its ways of working are fully compliant under Indian competition laws and they do not harm any competition. Media reports of CCI investigation are misleading: Swiggy At the same time, Swiggy said in the statement that media reports of CCI’s investigation confuse the investigation process with the final result and are misleading. Based on the CCI’s order of April 5, 2022, the Director General had investigated certain aspects of our business operations. Its investigation and March 2024 report is an initial step in the investigation being conducted by the CCI, not a final decision as some reports suggest. We have disclosed all the details of the case in the company’s public filing of DRHP filed on September 26, 2024. Swiggy has not yet received any information from the CCI about the results to file a response to the DG’s result. Once Swiggy submits its response and the CCI hears the matter, the CCI will give its decision on whether any competition law has been violated. Committed to comply with the existing laws of the country At present, it is in the initial stage and no final decision or order has been issued in the ways of working of Swiggy after 2022. Swiggy is fully cooperating in the investigation and is committed to comply with the existing laws of the country. According to media reports, CCI has found in the investigation that Zomato and Swiggy have been found involved in unfair business practices. CCI has also said that both the platforms were also giving preferential i.e. special treatment to some restaurant partners. The Competition Commission had ordered a detailed investigation against both the companies in April 2022 and the investigation report was submitted to the regulator i.e. CCI earlier this year. Under the rules, the report of the CCI Director General has been shared with both the companies and later they will be called for hearing by the Commission. CCI will pass after everyone’s consideration and clarification. NRAI had filed a complaint against Zomato-Swiggy The decision to investigate Zomato and Swiggy was taken on the complaint filed by the National Restaurant Association (NRAI). According to media reports, the investigation found that both Zomato and Swiggy were involved in anti-competitive practices. Both companies were giving special treatment to some restaurant partners. The report was submitted to the regulator earlier this year. NRAI had said that it has reviewed the revised investigation report sent in March 2024. The association said in a statement, ‘To protect the interests of the market, we recently filed a petition in the High Court in November 2024 requesting CCI to provide us access to the full report. Swiggy had mentioned about the CCI case in the RHP of the IPO. NRAI President Sagar Daryani has expressed hope that CCI will also expedite the investigation on other issues raised by NRAI in its petition in 2022. Last month, Swiggy had mentioned the CCI case in the red herring prospectus for its initial public offering (IPO). Swiggy’s IPO closed on Friday, November 8. The National Restaurant Association of India had raised concerns that both food delivery platforms, Zomato and Swiggy, are doing things that can prevent competition in the food delivery market. This violation is centered on exclusive agreements with restaurants. Swiggy is accused of giving more opportunities to advance those restaurants that are listed only on their platform, while Zomato is said to have reduced commissions for restaurants that have similar ‘exclusive contracts’. Both other food aggregators and consumers may be harmed: CCI According to the investigation unit of CCI, these actions are preventing the market from becoming more competitive, which can potentially harm both other food aggregators and consumers. Both companies have come under scrutiny for dominating the Indian food delivery landscape, raising concerns about their market power and impact on smaller competitors and restaurant owners. The results of the CCI investigation are now awaited as these could have a major impact not only on Swiggy and Zomato but also on the ecosystem of online food delivery services in India.
