New Delhi: The Competition Commission of India (CCI) has ordered an investigation against leading food delivery companies Swiggy and Zomato after the complaints received from the National Restaurant Association of India (NRAI) over platform neutrality. The CCI has ordered an inquiry into the operations and business model of these companies. The commission has ordered an inquiry into the alleged violation of sections 3(1) and 3(4) of the Competition Act.
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What CCI said in its order?
The commission has noted that the said food aggregators Swiggy and Zomato in quest of their commercial interest through private labels and cloud kitchens may affect platform neutrality and requires detailed examination.
The CCI, in its order dated April 4, 2022, has said that primarily in view of certain conduct of Zomato and Swiggy, investigation by the Director General (DG) seems necessary against them. Through investigation, it can be found out whether the conduct of these companies violates sections 3(1) and 3(4) of the Competition Act or not.
DG will do detailed investigation
The commission has directed the DG to conduct a detailed inquiry in the context of section 26(1) of the Competition Act. The commission has asked the DG to submit the report of the investigation to the Competition Commission within 60 days of receipt of this order.
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Issue details –
An inquiry has been ordered against these companies on the complaint of the National Restaurant Association of India (NRAI). NRAI has alleged that aggregators with more than 90 per cent market share in India’s food delivery industry are violating India’s competition law by offering huge discounts, exclusive tie-ups and preferences for certain restaurant partners. The organization alleges that this is affecting the business of restaurants and new restaurant players are facing difficulty in entering the industry.
After this CCI felt that some things said by NRAI should be investigated. Apart from this, the restaurant body has made many allegations like delayed payment cycle, unilateral clauses in the agreement, charging exorbitant commission.
