The Competition Commission of India on Monday issued an order to carry out a detailed inquiry against renowned food delivery platforms, Zomato and Swiggy, for alleged unfair business practices concerning the violations of Sections 3(1) and 3(4) of the Competition Act.
The order comes to light on a complaint lodged by the NRAI National Restaurant Association of India raising concerns over the platforms, dealing with the restaurant partners. It was also claimed that the firm is providing its services to certain brands in exchange for extra fees or rental commissions.
What’s The Matter Exactly?
NRAI represents 5000 restaurants throughout the country. On its allegations, it has been stated that the commissions charged from them are Unviable and are tuned to 20 to 30%, which are extremely high. Zomato was impeached for charging 27.8% approx of the order value from the restaurant listed on its Panel while for Cloud Kitchens the commission rate is 37% high.
Also Read: 10 Minutes Delivery Plan Of Zomato Is Raising Safety Concerns
CCI Directs Investigations
CCI has said allegations involving delayed payment cycles, high commission, and one-sided condition demands investigation. It further states that the preferential treatment given to Restaurant Partners (RPs) in which these platforms own equity or revenue can make it difficult for current RPs to compete on fair means.
“Given that Zomato and Swiggy are the two biggest platforms present in the food delivery segment, their respective agreements with RPs of this nature are likely to have an Appreciable Adverse Effect on Competition (AAEC) on the market by way of creating entry barriers for new platforms, without accruing any benefits to the consumers,” CCI states in a 32-page order.
CCI chairperson Ashok Kumar Gupta earlier had said that – The commission has advised e-commerce platforms to bring transparency in some aspects of their operations, and the absence of self-correction. The CCI may implement the “instrumentality of the law,”
NRAI In Response To CCI Probe Order on Zomato and Swiggy
Responding to the order issued by CCI on 4th March 2022 National Restaurant Association of India (NRAI) on Tuesday said it is “extremely happy” with the Competition Commission of India’s (CCI) directive for passing a probe order against food aggregators Zomato and Swiggy.