INDIA – Documents from the Competition Commission of India (CCI) allege food delivery giants Swiggy and Zomato have breached competition laws, with their business practices favoring select restaurants listed on their platforms.
According to recently released documents from the Competition Commission of India (CCI), food delivery giants Zomato and Swiggy entered into exclusivity agreements with certain restaurant partners in exchange for reduced commissions.
In return, Swiggy promised business growth to partners who agreed to list exclusively on its platform. The CCI’s investigative arm noted that such exclusivity arrangements hinder market competitiveness by limiting the scope for other players to enter or grow in the space.
The antitrust investigation into Swiggy and Zomato began in 2022, following a complaint from the National Restaurant Association of India, which alleged that the practices of these platforms negatively impacted food outlets.
The confidential CCI documents were shared with Swiggy, Zomato, and the complainant restaurant group in March 2024. The findings were not previously disclosed to the public.
The CCI case is also mentioned as a potential risk in Swiggy’s IPO prospectus, which notes that any violation of the Competition Act could lead to significant financial penalties.
The investigation revealed that Swiggy had informed investigators that its “Swiggy Exclusive” program was discontinued in 2023, but the company was planning to launch a similar initiative called “Swiggy Grow” in smaller cities.
However, the CCI documents indicate that the platforms’ practices reduced competition by pressuring restaurants to maintain price parity across different delivery services. This prevented restaurants from offering lower prices on competing platforms.
Zomato was found to have imposed restrictions on pricing and discounts for restaurant partners, and in some cases, included penalties for non-compliance. Swiggy similarly warned its partners that failure to maintain price parity could result in lower rankings on the platform.
The CCI’s investigation is nearing its final phase, with the commission’s leadership set to decide whether to impose penalties or mandate changes to the business practices of Swiggy and Zomato.
This decision is expected to take several weeks, and both companies will have the opportunity to contest the findings.
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