The Competition Commission of India found food delivery giants Zomato and Swiggy breached competition laws by favouring select restaurants through exclusive contracts and pricing restrictions. The delivery giants are faced with potential penalties pending a final leadership review
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India’s Competition Commission of India (CCI) has found that food delivery giants Zomato and Swiggy engaged in anti-competitive practices by favouring select restaurants.
According to confidential investigation documents reviewed by Reuters, a probe by India’s antitrust body was launched in 2022 after a complaint from the National Restaurant Association of India (NRAI).
The association had alleged that Zomato and SoftBank-backed Swiggy used exclusive partnerships and pricing restrictions to disadvantage competing food outlets.
The Competition Commission has now concluded that these business practices hindered fair competition within the market.
Exclusivity contracts
The CCI documents detailed how Zomato entered “exclusivity contracts” with certain restaurants in exchange for lower commission fees, while Swiggy guaranteed growth for outlets that chose to list exclusively on its platform.
Swiggy’s “Swiggy Exclusive” program, which it said was phased out in 2023, could resurface under a new “Swiggy Grow” initiative targeting non-metropolitan areas, the CCI report noted.
Such exclusivity agreements between the platforms and their partner restaurants, according to the CCI’s findings, obstruct market competition by consolidating business toward select players.
Price parity requirements
The report also shed light on price parity requirements imposed by both Zomato and Swiggy, mandating that partner restaurants match prices across platforms, which prevented restaurants from offering lower prices on other apps.
Swiggy’s partner restaurants reportedly faced threats of lower rankings if they failed to maintain price parity, while Zomato enforced discount restrictions and penal provisions on non-compliant restaurants.
The investigation findings were shared privately with Zomato, Swiggy, and the complainant group in March 2024.
Q-commerce operation under scanner
Swiggy and Zomato have reshaped India’s food delivery landscape over recent years, growing exponentially amid rising smartphone usage and increased online food ordering.
Both companies have also rapidly expanded into “quick commerce,” offering grocery deliveries within 10 minutes, further diversifying their operations.
Last month, India’s largest retail distributors’ association urged the CCI to investigate Zomato, Swiggy, and another rival, Zepto, for alleged predatory pricing within the quick commerce sector.
The next phase of the CCI’s case will involve a leadership review to determine possible penalties or adjustments to Swiggy’s and Zomato’s business practices.
With inputs from Reuters