Eatery Owners Accuse Indian Zomato of Abuse of Dominant Position

Eatery Owners Accuse Indian Zomato of Abuse of Dominant Position
Photo: 03.03.2023 141

Food delivery service Zomato raises the commission for some restaurant partners by 2-5%. Eatery owners are against it.

For the past two years, Zomato has been charging a commission of 18-25 per cent per order for deliveries, depending on its arrangement with restaurant partners. Take rates have already climbed from about 5-10% over the past five years or so, the national restaurant association of India (NRAI) had said in October. That was especially worrying because Zomato and Swiggy together command about 95% of the food delivery business, they added.

Both players have a commission rate that is unique to each of its restaurant partners. According to an NRAI spokesperson, Zomato usually charges a 15%-22% commission per order exclusive of payment gateway charges and GST. Meanwhile, Swiggy's commission ranges between 9%-22% per order depending on the average order value (AOV) with a higher AOV attracting lower commission.

“So, while one pays 15% as commission on Swiggy, it is 15% plus 1.84% payment gateway charges for the same on Zomato,” 

stressed NRAI spokesperson.

A score of restaurants have reportedly been warned that they would be delisted, their delivery radius will be reduced, or the onboarding of new restaurants will be made more difficult if they fail to comply with the revised commission ask.

“This is clearly an abuse of dominance on Zomato’s part and unfair trade practices which the NRAI vehemently opposes,”

said NRAI spokesperson, adding that the association would be happy “to talk this through” with Zomato.

Both Zomato and Swiggy have acknowledged that the food delivery business has slowed over the past quarters. To better its margins and break even by Q2FY24, Zomato exited 225 markets in January where its performance over the past few quarters “was not very exciting” the company’s CFO Akshant Goyal said.

A Zomato spokesperson said the company is constantly  reconsidering its commissions " to make sure they are competitive and sustainable for restaurant partners as well as Zomato.”

Restaurant owners in India often complain about the terms of cooperation with Zomato and Swiggy. Last April, following a complaint from NRAI, the Competition Commission of India investigated both companies for violations of platform neutrality and the granting of privileges to exclusive contractors.

Sources: Financial Express,

digital markets  India 

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