Swiggy, Zomato Are Destroying Competition, Abusing Market Dominance; Investigation Can Start Soon

The two leading online food delivery companies of India, Swiggy and Zomato, are both facing allegations now. 

Reports have confirmed that investigations will be launched into both the food aggregators, as they have been accused of the delayed payment cycle, imposition of one-sided clauses and exorbitant commission.

Swiggy And Zomato To Be Investigated By Director General

As per the Competition Commission of India (CCI), the conduct of Swiggy and Zomato should be investigated.

The CCI said, “The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy, which requires an investigation by the director general (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions.”

As per reports, the director general has been asked by the fair trade regulator to launch a detailed inquiry into the accusations. A report is also expected within 60 days. 

The order has been issued on the complaint filed by the National Restaurant Association of India (NRAI). The NRAI represents more than 50,000 restaurant operators across the country. 

We had previously reported in December that food delivery apps Zomato and Swiggy will face scrutiny from the Income Tax department on the discounts it offers. The department is targeting the companies’ offers of discounts on payments made by a particular credit card, debit card or any digital wallets.

They also offer extra discounts if a customer orders beyond a particular amount or from a certain restaurant.

Food Aggregators Accused Of Data Masking, Deep Discounting, And More

As per reports, the antitrust body was approached by the NRAI in July last year and requested that the companies’s tactics of data masking, deep discounting, and violation of platform neutrality should be looked into.

It stated, “During the (Covid-19) pandemic, the magnitude of anti-competitive practices of Zomato and Swiggy have increased manifold and despite numerous discussions with them, these deep funded marketplace platforms are not interested in alleviating concerns of the restaurants.”

As per the allegations of NRAI, the commissions that are charged from the restaurants are “unviable” and are around 20 percent to 30 percent, which is excessive.

Zomato has been accused of charging around 27.8 percent of the order value to the restaurants that have been listed on the platform. And the commission rate goes to as much as 37 percent for cloud kitchen.