Zomato reacts over Competition Commission's probe

"We will continue to work closely with the Commission to assist them with their investigation and explain to the regulator why all of our practices are in compliance with competition laws and do not have any adverse effect on competition in India. We intend to promptly comply with any recommendations given to us by the Commission," the food delivery and restaurant discovery platform said in a statement on April 5, Moneycontrol reported.

The anti-trust watchdog ordered an investigation into the business practices of both Zomato and Swiggy after a restaurant association accused of increasing predatory behaviour by the food aggregators.

"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," the CCI noted, according to the report.

The National Restaurants Association of India (NRAI) has welcomed the probe ordered by CCI.

The association said it is happy that CCI "saw merits in our submission which highlighted restaurant industry’s concerns".

"It may be noted that the NRAI has been engaging with both the aggregators and the concerned government authorities in the past few years to resolve existing pain points of the Industry vis-à-vis operations of the aggregators. These pain points were acutely amplified during the pandemic when restaurants and cloud kitchens were struggling for survival by way of their increased dependence on these aggregators," it said in a statement, stated the report.

NRAI, which has more than 50,000 bodies under its umbrella, had filed a complaint against Zomato and Swiggy in July 2021 alleging delayed payment cycles, data masking, imposition of one-sided clauses, and exorbitant commissions.

Further, they had also accused the food aggregator platforms of conflict of interest as they themselves also run a few cloud kitchens that sell on the platform.

The association accused Zomato and Swiggy of charging  "unviable" commissions that "are to the tune of 20 percent to 30 percent, which are extremely exorbitant".

Zomato was accused of charging approximately 27.8 percent of the order value from the restaurants listed on its platform.

For cloud kitchen, the commission rate is as high as 37 percent, the complainant had claimed.

"Zomato offers exclusivity on the basis of commission as low as zero percent and also offers minimum guarantee in the form of order volume guarantee and order value guarantee. Swiggy is also stated to be imposing exclusivity on the RPs on the basis of signage policy," the CCI order said.

In response to the CCI order, Zomato has said that only 1 percent of restaurant partners listed on its platform are exclusive to it, the Moneycontrolreport stated.