The Competition Commission of India (CCI) has ordered a probe into the operations and business models of food delivery majors, Zomato and Swiggy.
Online food delivery platforms Zomato and Swiggy are set to face an investigation by the antitrust regulator over platform neutrality concerns raised by the National Restaurant Association of India (NRAI), a body that represents over 500,000 restaurants in the country.
Zomato and Swiggy dominate the fast-growing Indian market with a combined share of 95%.
The Competition Commission of India acknowledged a series of allegations — including food delivery firms’ practice of bundling delivery services with customers’ food orders, masking data from restaurant partners, giving priority to private brands, operating cloud kitchens, “unfair and one-sided contracts” with the outlets, delayed payment cycle — and said they are worth probing to see if they violate the law.
The National Restaurant Association also claims that the two companies are charging "exorbitant commissions" (20-30%) to restaurants.
Also, the Сommission's statement said that the services’' agreements with restaurants could create "entry barriers for new platforms, without accruing any benefit to the consumers".
The CCI had released a market study on e-commerce in 2020 which also analysed competition dynamics in the online food delivery space. It had also highlighted concerns of the marketplace acting as a market participant in the study.
According to the study, a lack of transparency of online platforms’ functioning can lead to disruption of competition. It was recommended that online platforms improve transparency to reduce information asymmetry between sellers using platforms and the platforms.