India’s antitrust watchdog finds Zomato and Swiggy violated competition laws
Anti-competitive practices called for an investigation.
India’s antitrust regulator, the Competition Commission of India (CCI), has found that food delivery giants Zomato and Swiggy violated competition laws by favouring select restaurants on their platforms. According to the CCI’s investigation, Zomato used ‘exclusivity contracts’ to offer lower commissions to certain partners, while Swiggy promised growth to restaurants that listed exclusively with them. These practices, the report states, hinder market competition, as they prevent smaller players from gaining a fair foothold.
The investigation, which began in 2022 following a complaint by the National Restaurant Association of India, also highlights restrictive pricing practices on both platforms. Zomato imposed conditions to maintain price and discount parity across online platforms, even threatening penalties for non-compliance. Swiggy, on the other hand, pressured some partners by suggesting their ranking on the app would drop if they failed to match prices elsewhere. Swiggy later claimed that it discontinued its exclusivity program in 2023 but has plans to launch similar initiatives in smaller cities.
The probe has potential implications for Swiggy’s $1.4 billion IPO and lists the CCI investigation as an “internal risk” in its prospectus. Both companies have faced additional scrutiny recently, as India’s largest retail distributors have urged the CCI to investigate alleged predatory pricing in their quick-commerce grocery services. The CCI’s final decision on penalties or required changes to Zomato’s and Swiggy’s business practices is expected in the coming weeks, though the companies may challenge the findings.