Petition to CCI and PMO alleges Zomato, Swiggy for misusing of dominant position

After several complaints against e-commerce companies such as Flipkart and Amazon over deep discounting and predatory pricing, now foodtech platforms are facing the wrath from a slew of restaurants that may take a larger shape in coming days.

Over 500 restaurant companies have signed a petition addressing CCI and PMO that allege Swiggy, Zomato, Foodpanda and UberEats of misuse of dominant position in the Indian market.

Apart from the deep discounting, the petition also accused these aggregators for using in-house kitchens and internal sourcing model for eating up their business.

Defending itself on the allegations, a Zomato spokesperson said that the discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign.

The petition further targeted in-house companies like HyperPure by Zomato and The Bowl Company, an in-house Kitchen by Swiggy. It alleged that Zomato forces restaurants who want to list on the platform to purchase these items from Hyperpure, which is against the Competition Act.

Similarly, it blamed The Bowl Company for monopolising the market as it required to pay huge tariffs to get their products listed on the platform. Also, the first ad which is shown to an end-user on logging in is Swiggy's in-house kitchen.

Swiggy in its statement said that the commissions it charges are a function of the value it generates for the partners and is mutually agreed upon. The Naspers-backed company also claimed to doubled the number of restaurant partners on the platform to over 55,000.

UberEats and Foodpanda are also on restaurants radar for dishing out hefty discount and freebies.

Of late, all foodtech platforms had been facing a tough time in Kerala as the Kerala Hotels and Restaurants Association (KHRA) decided to distance itself from these heavyweights. They are also considering creating a parallel app showing anger over existing arrangement and service charges issue.

Reaching out to Entrackr, a Zomato spokesperson has clarified the matter with the following statement.

"At Zomato, we believe in providing the best services and experiences to our users; and endeavour to meaningfully help grow the businesses of our partners as well. Our platform lists more than 75,000 restaurants, of which a significant majority are small and mid-size restaurants. We have significantly expanded our online ordering and food delivery services and are currently present across 118 cities in India. We have been able to deliver long-term growth for our restaurant partners by connecting them with more users. Infact, a lot of our restaurant partners have been able to expand their operations since food delivery has helped them exponentially leverage the fixed and man-power costs.

"With HyperPure, our aim is to provide organic and residue free fresh produce to all the restaurants at their doorsteps while helping them save on the purchasing cost. The service is only present in Bangalore currently and already has a quality breadth of restaurants. HyperPure has received a great reception so much so that our order list is bigger than our what we can currently service. It is helping restaurants save efforts of sourcing food ingredients from an otherwise unorganised market. A small to mid-size restaurant stands to save 10-15% in their monthly expenses on ingredients purchase. We don’t constrain the restaurants on our platform to associate with HyperPure, doing so will be completely against our ethics. Restaurants can choose the HyperPure services if they find them beneficial enough.

"Zomato’s prime objective is to contribute to the growth of the restaurant industry in the country, which we have been doing over the last decade with the help of our various services. We are discussing the matter with the involved restaurant partners to achieve an amicable solution, which would benefit all the parties in the ecosystem.”

The development was reported by ET.