Food aggregator platforms Zomato and Swiggy will face a probe by the Competition Commission of India (CCI). In an order dated the 4th of April, CCI has directed the Director General (DG) to investigate both the startups. As per the directions, the Director-General of CCI will investigate the matter and submit a report to the antitrust body within 60 days.
You might be wondering why the two biggest food delivery startups will face a probe all of a sudden. This is mainly because CCI has received a complaint from the National Restaurant Association of India (NRAI). In their complaint, NRAI has requested CCI to investigate the practices of Zomato and Swiggy. Their main allegation is around the commission charged to restaurants by food delivery aggregators.
Zomato and Swiggy CCI Investigation
As per them, Zomato and Swiggy take a huge cut of 18-25% from the order value as their platform commission fee. If these complaints are true, then the commission rates are very high. It might become very tough for restaurants to run their business.
Adding to their claim, NRAI has said Zomato and Swiggy have a combined market share of 95% in the online food delivery space. Due to their monopoly in the business, these startups are forcing restaurants not just to pay a high commission rate but also to run deep discounts and offers.
Earlier Zomato and Swiggy used to offer discounts from their pocket. But now they are demanding restaurant owners offer discounts. Only then can they keep an adequate listing on the platform. The restaurant owners are already paying 18-25% in commissions. How can they afford to give huge discounts and lure customers?
All of the above are allegations; the Director-General has 2 months to conduct a probe and submit the report. Let’s see the final outings of the investigation. We will keep you will update with new developments in the story. In the meantime, what do you think about Zomato and Swiggy? Are they using unfair practices and harassing the restaurant owners. Do let us know in the comments.