CCI order probe against Zomato and Swiggy for their alleged unfair trade practices

Case Details: National Restaurant Association of India (‘NRAI’) v. Zomato Ltd. (‘Zomato’) - [2022] 140 taxmann.com 632 (CCI)

Judiciary and Counsel Details

• • Ashok Kumar Gupta, Chairperson, Ms. Sangeeta Verma & Bhagwant Singh Bishnoi, Member

Facts of the Case

The Zomato and Swiggy were providing service of app-based food ordering and delivery platform. The Informant, Association for Restaurant, had alleged contravention of section 3 by OPs. According to the informant, OPs were engaged in practice of data masking, where restaurant partners (RP) received no data about end-consumer to whom food was delivered, which created lack of transparency. It also alleged that commissions charged by OPs from RPs to tune of 20 per cent to 30 per cent, were extremely exorbitant.

Further, OPs delayed in making timely remittances and payment cycles, which started with 2-3 days from date of order had then increased to 7 days. In addition to protracted payment cycles, OPs also deducted arbitrary amounts/hidden charges from payments without RP ever knowing reason thereof.

Further, agreements which RPs had with OPs were one-sided and contained unfair conditions e.g. unilateral right to terminate services of RPs.

CCI Held

The CCI held that issues pertaining to delayed payment cycle, imposition of one-sided clauses in agreement, charging of exorbitant commission did not have an effect on competition. However, there existed a prima facie case with respect to some of conduct of OPs, which required an investigation by DG to determine whether conduct of OPs had resulted in contravention of provisions of section 3(1), read with section 3(4). Therefore, DG was directed to carry out a detailed investigation into matter.

List of Cases Referred to

• • CCI v. Steel Authority of India Ltd. [2010] 7 taxmann.com 23/103 SCL 269 (SC) (para 30).