May 26, 2022

India’s competition authority on Monday launched a comprehensive investigation into the behavior of food delivery companies Zomato and Swiggy following a complaint from the National Restaurant Association of India, which represents more than 50,000 restaurants in the country.

The Competition Commission of India has issued a number of allegations (PDF), including delivery service practices for bundling delivery services with customer orders, masking restaurant partner details, operating cloud kitchens, and outlets with “bad faith and unilateral contracts”. , delayed billing cycles, and charging exorbitant fees—and told them to look out for them if they were breaking the law.

“NRAI also claims that OPs are playing a dual role on their platform, listing their own cloud kitchen brands exclusively on their platform, like private labels, as the sole intermediary in the platform role, creating an inherent conflict of interest. And as a participant from the other side,” the watchdog described in his act on Monday.

However, the watchdog said it believes that, at first glance, “fees related to delayed billing cycles, one-sided clauses in the agreement, charging exorbitant fees, etc. based on these comments” are irrelevant. On Competition in the Facts and Circumstances of the Present Case”.

And then came the change of mind, a paragraph later: “However, as discussed in the previous paragraph, the Board considers that there is a prima facie case concerning certain conduct by Zomato and Swiggy, which the Director General (“DG”) requires investigation of, together with paragraph 3(4 ) to determine whether the implementation of the OP resulted in a violation of the provisions of section 3(1) of the Law in the broadest sense.”

The CCI said the CEO has been instructed to conduct a detailed investigation and present the results within 60 days.

The investigation is just a new headache for food delivery companies. Zomato, which has not shown itself in the public market, is exploring the possibility of introducing a fast food delivery service, a category that will no doubt further complicate relations with restaurant partners.

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