National

Zomato, Swiggy Face Accusations Of Unfair Practices

An investigation by the Competition Commission of India revealed that major food delivery platforms Zomato and Swiggy have violated competition laws in India.

According to CCI documents, the investigation found that both companies engaged in practices that gave preferential treatment to select restaurants, potentially stifling competition.

The probe uncovered that Zomato entered into “exclusivity contracts” with restaurant partners, offering them reduced commission rates in return for listing exclusively on its platform.

Similarly, Swiggy reportedly promised better business performance and visibility to restaurants that agreed to exclusive partnerships. These exclusive agreements have been flagged by the CCI as actions that hinder market competitiveness.

The investigation was launched in 2022 after concerns were raised by the National Restaurant Association of India over the negative impact of such practices on food establishments. The findings, shared in March 2024, remain confidential under CCI regulations.

In response to the probe, Zomato’s stock saw a 3% dip, reflecting investor concern over potential consequences. Swiggy, meanwhile, acknowledged the ongoing investigation in its IPO documentation, labeling the CCI case as an “internal risk” and warning that breaches of competition laws could lead to substantial financial penalties.

The investigation also uncovered that both platforms implemented price parity across different delivery services, a practice that directly reduces competition. Zomato, for instance, imposed strict pricing controls on its restaurant partners, with penalties for non-compliance.

Similarly, Swiggy allegedly threatened to lower the rankings of restaurants that did not maintain price parity.

Swiggy informed investigators that its “Swiggy Exclusive” program ended in 2023, but it plans to introduce a similar initiative, “Swiggy Grow,” in non-metropolitan cities.

The case is currently under final review by CCI leadership, which will determine whether penalties or operational changes are warranted. Both Zomato and Swiggy have the option to contest the findings.

Despite these regulatory concerns, both platforms have shown substantial growth. Zomato’s market value reached approximately $27 billion after its 2021 listing, while Swiggy is seeking a valuation of $11.3 billion through its ongoing IPO.

Macquarie Capital forecasts Swiggy’s food order value for 2024-25 at $3.3 billion, about 25% lower than Zomato’s.

Read More: Supreme Court, Delhi High Court, States High Court, International

Meera Verma

Recent Posts

Rajasthan HC Quashes SC/ST Case Against Actress Shilpa Shetty

The Rajasthan High Court on Thursday quashed a complaint filed under the SC/ST (Prevention of…

13 hours ago

Allahabad HC Turns Down Appeal Seeking Appointment Of Receiver For Jaigurudev Sanstha

The Allahabad High Court on Thursday has dismissed an appeal filed by the Jaigurudev Dharma…

13 hours ago

Shivaji Statue Collapse Case: Bombay HC Grants Bail To Consultant Chetan Patil

The Bombay High Court granted bail to consultant Chetan Patil on Thursday in connection with…

14 hours ago

Excise Policy Case: Delhi HC Refuses To Stay Trial Against Arvind Kejriwal

The Delhi High Court on Thursday declined to stay the trial proceedings against former Delhi…

15 hours ago

AP Assembly Passes Resolution To Set Up HC Bench In Kurnool

The Andhra Pradesh Assembly on Thursday passed a resolution to establish a permanent High Court…

15 hours ago

Lesbian Couple Desiring Child Gets Bail In Kidnapping Of Minor Girl

The Bombay High Court on Thursday granted bail to a lesbian couple arrested for allegedly…

16 hours ago