Zomato, Swiggy in trouble? CCI orders probe; here's why

Food delivery platforms Zomato and Swiggy could be in a problem as the Competition Commission of India (CCI) on Monday ordered a detailed probe against both for alleged unfair business practices with respect to their dealings with restaurant partners.

The CCI noted that preferential treatment accorded to the restaurant Partners, in which Zomato and Swiggy have an equity or revenue interest can create barriers for the existing restaurant partners to compete on fair terms.

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The regulator said that "prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the restaurant partners vis-à-vis the private brands/entities which the platforms may be incentivised to favour".

The order has come on a complaint filed by the National Restaurant Association of India (NRAI), which represents over 50,000 restaurant operators across the country.

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Both Zomato and Swiggy operate as major intermediary platforms in the food delivery space, underscoring their market power and ability to adversely as well as appreciably affect the level playing field, the Competition Commission of India (CCI) said.

"Such preferential treatment can be through various ways given the platform's control over different aspects that influence competition on them, including control over deliveries, search ranking etc. which can only be examined appropriately in an investigation," it said.

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Besides, the anti-trust regulator said the price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate wide restrictions where the restaurant partners are not allowed to maintain lower prices or higher discounts on any of their own supply channel or on any other aggregator, so that the minimum price or maximum discounts can be maintained by the platform.