CCI Probe: Zomato, Swiggy Say Committed To Complying With Competition Law

Facing a CCI probe for anti-competitive practices, online food delivery platform Zomato has asserted it complies with the country's laws while rival Swiggy said it is committed to complying with local regulations. Both companies termed news reports on the Competition Commission of India's (CCI) investigation "misleading", maintaining that the CCI is yet to pass its final order on the matter of unfair business practices, including alleged preferential treatment to some restaurant partners by Zomato and Swiggy.

In a regulatory filing, Zomato said the CCI had issued a "prima facie" order on April 4, 2022, which directed the Office of the Director General of the Commission to investigate potential violations under the Competition Act, 2002. Since the intimation of April 5, 2022, the commission, on merits, has not passed any order, the company said. "Accordingly, the aforementioned news article is misleading.

We will continue to work closely with the Commission to explain why all our practices are in compliance with the Competition Act and that they do not have any adverse effect on competition in India," Zomato stated in the filing. In a statement, Swiggy said media reports of the CCI's investigation into Swiggy confuse the investigative process with the final outcome and are misleading.

"Based on the order of the CCI dated April 5, 2022, the Director General investigated certain aspects of the conduct of our business and its inquiry and report of March 2024 is a preliminary step in an ongoing investigation by the CCI, and not a final decision as some reports suggest," Swiggy said. The company further stated it is yet to receive the confidential details of the findings from the CCI for filing a response to the DG's finding.

"Once Swiggy submits its response and CCI conducts a hearing on the matter, CCI will pass its decision on whether any competition law violations have occurred. Currently it's at a preliminary stage and no final decision or order has been issued regarding Swiggy's practices since 2022," the company said. Swiggy maintained that it is "fully cooperating with the investigation and is committed to complying with the extant laws of the country".

However, a CCI probe has found that the two food delivery platforms indulged in unfair business practices, including alleged preferential treatment to some restaurant partners, according to sources. The detailed investigation was ordered by the CCI in April 2022 and the probe report was submitted to the regulator earlier this year. Under the norms, CCI Director General's report has been shared with the parties concerned and later, they will be called for hearings by the watchdog. After gathering all the views and explanations, the regulator will pass the final order. The decision to probe the two entities had come on a complaint filed by the National Restaurant Association of India (NRAI).

Last month, Swiggy mentioned about the CCI case in the Red Herring Prospectus for its Initial Public Offering. The IPO closed on Friday. While ordering the investigation in April 2022, CCI had said that "prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the RPs vis-a-vis the private brands/entities which the platforms may be incentivised to favour".

As per the April 2022 order, preferential treatment accorded to the Restaurant Partners (RPs) in which these platforms have an equity or revenue interest can create barriers for the existing RPs to compete on fair terms. Among others, the watchdog had said that price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate wide restrictions where the RPs are not allowed to maintain lower prices or higher discounts on any of their own supply channel or on any other aggregator, so that the minimum price or maximum discounts can be maintained by the platform.

(PTI)