Delivery giants, Zomato and Swiggy, are under the Indian antitrust watchdog’s eyes for alleged breach of conduct. The allegations put on them were misusing consumer data and providing priority to exclusive contractors amongst others. The whistleblower is the National Restaurant Association of India, a body that represents over 500,000 restaurants in the country.
The probe order came on April 4 as both Swiggy and Zomato came under CCI’s radar for conducting unfair business practices. The competitors will be investigated and CCI’s DG will submit a report within 60 days proving their ‘neutrality.’
What are the allegations?
The complainant has alleged Zomato and Swiggy were misusing consumer data, charged exorbitant commissions from restaurants and provided massive discounting to customers. Although, earlier the parties were funding such discounts themselves, but now the restaurant partners have to bear the brunt as the discounts have been mandated to be funded by them. This was done by the delivery giants so that restaurant partners could maintain adequate listing on their platforms.
There are also allegations pertaining to delayed payment cycle to restaurant partners and imposition of one-sided clauses in the agreement. Preferential treatment to some restaurants could create barriers for some existing RPs and affect the level playing field.
The CCI probe comes at a time when Zomato is gearing up to start its instant 10-minute food delivery. Seems like the delivery giants will have to focus better on their business practices for now!
Too long? Here’s a one-liner: Zomato, Swiggy to face CCI probe for unfair business practices, as alleged by the National Restaurant Association of India; detailed investigation to follow.