Zomato Swiggy antitrust investigation has found that the two major food delivery platforms allegedly violated competition laws through exclusive business practices with selected restaurants, according to confidential documents reviewed by Reuters. The Competition Commission of India (CCI) investigation examined whether such arrangements could restrict competition and affect smaller restaurants operating on food delivery platforms.
The findings have put the business practices of Zomato and Swiggy under greater regulatory scrutiny, although the final decision and any potential penalties remain pending.
Zomato Swiggy Antitrust Investigation: What Did the CCI Find?
These exclusivity agreements between the companies and selected restaurant partners limit competition in the market, according to CCI’s investigative findings. The antitrust probe, which began in 2022 following a complaint from the National Restaurant Association of India, highlights concerns about the impact of such practices on smaller food outlets.
The confidential documents, shared with Zomato, Swiggy, and the complainant in March 2024, have not been previously disclosed. After Reuters' report, Zomato’s shares dropped 3%, though they were flat earlier in the day. Swiggy’s IPO prospectus lists this investigation as an "internal risk," warning that any violation of the Competition Act could result in significant fines.
Swiggy informed investigators that its "Swiggy Exclusive" program was phased out in 2023, though it plans to introduce a similar program called "Swiggy Grow" in non-metro areas. Both Swiggy and Zomato have transformed India’s food delivery landscape as smartphone use and online ordering surged, listing hundreds of thousands of outlets on their platforms.
The investigation found that both companies also required restaurants to maintain pricing parity, reducing market competition by preventing discounts on other platforms. Zomato was noted for enforcing price restrictions, sometimes with penalties for non-compliance. Swiggy allegedly warned some partner restaurants that their rankings would suffer if they didn’t follow price parity.
The final phase of the CCI case involves a decision from its leadership, which is still evaluating the investigation’s findings to determine any potential penalties or required adjustments to Swiggy’s and Zomato’s business practices. This decision may take several weeks, and both companies could still challenge the findings.
Zomato’s stock has surged to a valuation of approximately $27 billion since its 2021 listing, while Swiggy values itself at $11.3 billion in its IPO. According to Macquarie Capital, Swiggy’s projected food order values for 2024-25 are $3.3 billion, about 25% lower than Zomato’s.
Both companies are rapidly expanding into the quick commerce sector, offering grocery delivery within minutes. Last month, India’s largest retail distributors’ group requested the CCI to investigate alleged predatory pricing practices in this segment by Zomato, Swiggy, and competitor Zepto.
Read Aslo: Tata expands iphone manufacturing in India with Pegatron
Mutual fund investments are subject to market risks, read all scheme related documents carefully. Past performance does not guarantee future returns.
Related Insights & Market Perspectives
What Happens to Your Investments After You Die? 7 Key Steps Every Delhi NCR Family Should Know
What happens to your investments after you die is a question many people avoid. We spend years deciding where to invest but very little time planning what happens to that money when we're gone. You may have mutual funds across several folios, shares in a demat account, fixed deposits with different banks, insurance policies, bonds,.
Indian Hotels profit up by 232% for Q2, reaching ₹554 crore, with revenue rising by 27%.
Indian Hotels profit jumped 232% year-on-year to ₹554.6 crore in the quarter ended September 2024, compared with ₹167 crore in the same quarter of the previous fiscal year. The strong increase in quarterly profit was accompanied by a 27.4% rise in operating revenue, highlighting continued growth in the company’s hospitality business. Indian Hotels Profit Rises.
Rupee Drops as Trump Threatens Higher Tariffs on India Over Russian Oil Trade
Indian rupee falls 20 paise against the U.S. dollar on August 5 as renewed trade tensions between India and the United States triggered investor concerns. The rupee opened at ₹87.85 against the dollar, compared with the previous close of ₹87.65, as markets reacted to former U.S. President Donald Trump's threat of higher tariffs on Indian imports.