4 key reasons why restaurants complained to CCI about Zomato and Swiggy

Online food delivery platforms Zomato and Swiggy are under the scrutiny of the Competition Commission of India (CCI) for allegedly violating platform neutrality, data masking and charging exorbitant commissions from restaurants.

The CCI has ordered a probe against Bundl Technologies Pvt Ltd, which runs Swiggy, and Zomato Ltd, the owner of the Zomato app, following a complaint from the National Restaurant Association of India (NRAI) in July 2021.

The NRAI, which represents over 50,000 restaurants all over the country, complained that the online food platforms have violated the provisions of the Competition Act, 2002.

Here’s what NRAI’s complaint said

1.   Zomato and Swiggy charged exorbitantly high commissions from restaurants which can go up to 30%. As per NRAI, Zomato charges up to 27.8% of the order value from the restaurants listed on its platform. For cloud kitchens, the commission goes up to 37%, the association stated in its complaint.

2.   The two companies have been accused of hiding customer data and bundling delivery services with listing services. CCI believes this impacts market competition as the cost of doing business goes up, which is duly passed on to the end consumers. Besides, the quality of delivery gets affected as some restaurant partners (RPs) are prevented from making independent deliveries.

Also read: Real reason why food aggregators promise to deliver parcel in 10 minutes

3.   The NRAI has accused Swiggy and Zomato of collecting consumer data on the basis of their past purchases and using it to customise the offerings for each consumer, thus dictating terms to restaurants to what they should offer and what they should not.

4.   The NRAI stated that the two food delivery apps have created entry barriers for the new food delivery platforms. As a result, no new player has entered the market in the last three years.

Pandemic pain

“It may be noted that the NRAI has been engaging with both the aggregators and the concerned government authorities in the past few years to resolve existing pain points of the industry vis-à-vis operations of the aggregators,” said the association in a statement. “These pain points were acutely amplified during the pandemic, when restaurants and cloud kitchens were struggling for survival by way of their increased dependence on these aggregators.

“In the absence of a sustainable solution, NRAI filed information with CCI on 1st July, 2021 highlighting the concerns and issues related to the functioning of food aggregator platforms which should ideally operate as a neutral marketplace.”