Zomato, Swiggy Deny Report Alleging Antitrust Law Violation As 'Misleading'

Zomato and Swiggy have responded to the Competition Commission of India's probe that has reportedly found that the food delivery platforms breached antitrust laws.

Both the country's top food delivery aggregators—Zomato Ltd. and Swiggy Ltd.—breached the laws, the investigation by CCI revealed, according to a report by Reuters.

Zomato, in response to the report, issued a statement clarifying its position. The company confirmed it had been under investigation by the CCI since April 2022, following a prima facie order that required the Director General of the CCI to probe the matter further.

Zomato said that no final order has been issued by the CCI as of yet, and stated that it continues to cooperate with the Commission in defending its business practices.

Zomato's statement also highlighted that the matter had been disclosed to stock exchanges in April 2022, following the CCI's initial order. The company further described the media report as "misleading," asserting that its practices are fully compliant with Indian competition laws and do not harm competition.

Swiggy has clarified that the inquiry is still in its preliminary stages and no final decision has been made. According to the company, the findings released in March 2024 represent an early step in the investigation, not a conclusive ruling.

The company stated that it is yet to receive the confidential details of the DG's report, which would enable it to file a formal response. Once Swiggy submits its response, the CCI will hold a hearing before issuing any final decision regarding potential violations of competition law.

Swiggy also pointed out that the details of the investigation were fully disclosed in its public filing of the draft red herring prospectus on Sept. 26, 2024. The company reaffirmed its commitment to cooperating with the CCI and adhering to all applicable laws.

The CCI's investigation follows complaints from the National Restaurant Association of India and has raised concerns that both companies have engaged in practices that may stifle competition in the food delivery market.

The alleged violations center on exclusive agreements with restaurants. Swiggy is accused of offering growth opportunities to restaurants that commit to listing exclusively on its platform, while Zomato is said to have provided lower commissions to restaurants entering into similar "exclusivity contracts."

These actions, according to the CCI's investigation unit, are said to prevent the market from becoming more competitive, potentially disadvantaging both other food aggregators and consumers.

Both companies have come under increasing scrutiny as they dominate the Indian food delivery landscape, raising concerns about their market power and the impact on smaller competitors and restaurant owners.

The outcome of the CCI's investigation could have significant implications not only for Swiggy and Zomato but also for the broader ecosystem of online food delivery services in India.