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    CCI orders probe into conduct of Swiggy, Zomato within 60 days

    business | IST

    CCI orders probe into conduct of Swiggy, Zomato within 60 days

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    The CCI said: "There exists a prima facie case concerning the conduct of Zomato and Swiggy, which requires an investigation by the Director-General to determine whether their conduct resulted in contravention of the provisions in Section 3(1) of the Competition Act read with Section 3(4)."

    In the case of a restaurant association against Zomato and Swiggy for "anti-competitive practices", the Competition Commission of India (CCI) has said they have found merit in investigating the issue of platform neutrality. The CCI has said the conduct of the food aggregators needs investigation and has asked the deputy general to submit a report within 60 days.
    "There exists a prima facie case concerning the conduct of Zomato and Swiggy, which requires an investigation by the Director-General to determine whether their conduct resulted in contravention of the provisions in Section 3(1) of the Competition Act read with Section 3(4). The DG is, thus, directed to carry out a detailed investigation and submit a report within 60 days," the CCI said.
    Last year, the National Restaurant  Association of India (NRAI), which claims to represent more than five lakh restaurants, had approached the CCI, alleging Zomato and Swiggy were abusing their market dominance. This was just before Zomato initial public offering (IPO).
    "Zomato and Swiggy have taken unfair advantage of their market position, imposed vertical agreements with restaurants. They charge exorbitant commissions and levy gateway charges," the NRAI had alleged.
    The CCI order states: "As per NRAI, ideally, in a market characterised by network effects, the commission should come down to justify economies of scale and pass on the reduced cost to consumers and other stakeholders in the market. However, with Zomato, the commissions have nearly doubled in the last two years, presently standing over and above 25 percent and can reach as high as 37 percent."
    They had also said the food aggregators follow deep discounting practices and require restaurants to fund offers and schemes. "They impose one-sided agreements and reserve the right to terminate agreements without cause," they had said.
    They had also alleged that the platforms force restaurants to list exclusively on their respective platforms and restrain them from offering lower prices on any other sales channel. They even don't allow restaurants to self-deliver, the complaint had stated.
    They had also rued that the platforms use customer data to their advantage without sharing it with restaurants. In such scenarios, Zomato and Swiggy listing their cloud kitchen brands create a conflict situation, the NRAI had said.
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