Swiggy and Zomato have termed reports of violation of competition norms as misleading. Recently, media reports stated that the Competition Commission of India (CCI) found Zomato and Swiggy guilty of violating competition norms, i.e., competition laws.
In a statement, Zomato said that the CCI has investigated it since April 2022, and the CCI Director General had to investigate the matter further.
Zomato also said that the CCI has not issued a final order 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 CCI’s initial order.
Zomato said that the media reports are completely misleading, its practices are fully compliant with Indian competition laws and do not harm any competition.
Media reports on the CCI probe 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 5 April 2022, the Director General had investigated certain aspects of our business operations.
The CCI is conducting an investigation, and its March 2024 report is an initial step, not a final decision as some reports suggest. We disclosed all the details of the case in the company’s public filing of the DRHP submitted on 26 September 2024.
Swiggy has not received any information from the CCI regarding the results necessary for filing a response to the DG’s result. Once Swiggy submits its response and the CCI hears the matter, the CCI will issue a decision on whether anyone has violated competition law.
Committed to abide by the existing laws of the country
Currently, the investigation is at the initial stage, and authorities have not issued a final decision or order regarding Swiggy’s working methods after 2022. Swiggy is fully cooperating with the investigation and is committed to complying with the country’s existing laws.
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.
In April 2022, the Competition Commission ordered a detailed investigation against both companies, and earlier this year, the investigation team submitted the report to the regulator, i.e., CCI.
Under the rules, the CCI Director General has shared the report with both companies, and later the Commission will call them for a hearing. After everyone’s consideration and clarification, the CCI will make a decision.
NRAI had filed a complaint against Zomato-Swiggy
The National Restaurant Association (NRAI) lodged a complaint that prompted the decision to investigate Zomato and Swiggy. According to media reports, the investigation found that both Zomato and Swiggy engaged in anti-competitive practices by giving special treatment to some restaurant partners. The team submitted the report 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 the CCI will also expedite the investigation into other issues raised by the NRAI in its petition in 2022. Last month, Swiggy 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 expressed concern that both food delivery platforms Zomato and Swiggy were doing things that could prevent competition in the food delivery market. This violation focuses on exclusive agreements with restaurants.
Critics accuse Swiggy of providing more opportunities to advance restaurants listed only on its platform, while reports suggest that Zomato has reduced commissions for restaurants holding similar ‘exclusive contracts’.
Both other food aggregators and consumers may suffer losses: CCI
According to the CCI’s investigation unit, these actions are preventing the market from becoming more competitive, which could 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.
We are now awaiting the results of the CCI investigation, as these results could significantly impact not only Swiggy and Zomato but also the ecosystem of online food delivery services in India.
