How CCI order is also a breather for Zomato, Swiggy

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As the Competition Commission of India (CCI) ordered a thorough investigation into the conduct of online food delivery platforms Zomato and Swiggy, the detailed document has actually given a breather to the food delivery platforms, people close to the matter told IANS on Tuesday.

While the CCI has indeed directed a Director-General (DG) investigation, the order in some sense is a vindication for the food delivery companies since the CCI has not found concerns with issues around “bundling of services, their independence with respect to levy of commissions or the alleged imposition of unilateral clauses on restaurant partners”.

“A review of these issues may have impacted the sector significantly resulting in stifling competition in new-age markets. The CCI has, therefore, taken a very considered and pragmatic view,” said the people aware of the matter.

In regard to bundling of services, the CCI notes that bundling per se doesn’t seem to raise any competition concerns and as such, the informant has not been able to substantiate its claim that bundling of delivery with ordering, in itself, has led to or has the likelihood to cause AAEC either between restaurants or between hyperlocal delivery service providers.

The consumer watchdog notes that due to price parity as a result of inter-platform competition, there exist price parity terms in the agreements/contracts between Zomato and restaurant partners (RPs) which do not allow such RPs to develop their own direct ordering channels or a competing platform by offering more competitive rates.

On the issue of delayed payment cycle, imposition of one-sided clauses in the agreement, charging of exorbitant commissions, the CCI prima facie concluded that these do not seem to have an effect on competition in the facts and circumstances of the present case, according to sources.

Following a complaint from the National Restaurant Association of India (NRAI), the CCI said that it 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 NRAI represents over 50,000 restaurant operators across the country.

In a statement, the NRAI said that it is happy that the CCI saw merits in its submission which highlighted the restaurant industry’s concerns.

“The NRAI looks forward to a positive outcome of this investigation which will pave the way towards providing a level-playing field for all stakeholders in the ecosystem,” it said.

The NRAI had alleged that the commissions that are charged from restaurants are “unviable” and “are to the tune of 20 per cent to 30 per cent, which are extremely exorbitant”.

The CCI DG is expected to submit the report in 90 days.

Zomato on Tuesday said it will continue to work closely with the CCI to assist the fair market regulator with their investigation and explain to them why all of its business practices are in compliance with competition laws.

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