India's Food Delivery Giants Face Antitrust Scrutiny
India's Competition Commission (CCI) has found food delivery giants Zomato and Swiggy guilty of violating competition laws. The investigation, prompted by a complaint from the National Restaurant Association of India, revealed practices that allegedly favor select restaurant partners, limiting market competitiveness.
The investigation focused on exclusivity agreements, where Zomato offered lower commission rates to certain restaurants and Swiggy guaranteed growth to restaurants exclusively listed on its platform. These arrangements were found to hinder new players from entering the market and stifle competition, ultimately harming consumers.
The investigation also uncovered pressure tactics used by both companies to maintain consistent pricing across platforms. Zomato imposed pricing and discount restrictions, while Swiggy threatened partners with potential rank downgrades for offering lower prices elsewhere.
The findings, shared with the companies and the National Restaurant Association of India in March 2024, have already impacted Zomato's stock price. Swiggy, currently closing bids for its $1.4 billion IPO, faces potential penalties and operational changes due to the investigation.
This case highlights the growing regulatory focus on India's digital market, where aggressive growth strategies and competitive pressures often collide with compliance requirements. Both Swiggy and Zomato may contest any final decisions by the CCI, but the investigation serves as a reminder of the importance of fair competition in the rapidly evolving digital landscape.