On April 04, 2022, pursuant to a complaint filed by National Restaurant Association of India (‘NRAI’), the CCI directed the Director General (‘DG’) to investigate conduct of Zomato Limited (‘Zomato’) and Bundl Technologies Private Limited (‘Swiggy’) (together the ‘OPs’) over allegations concerning anticompetitive vertical restraints. ^[1]

NRAI that the two food delivery platforms imposed multiple vertical restraints on Restaurant Partners (‘RPs’) which has adversely affected the competition in the market for ‘restaurant marketplace with delivery services in various hyperlocal areas across India’. In support of this, NRAI alleged the following:

i.    Coerced bundling of services: The OPs bundle listing services on their platforms with food delivery services and the RPs are not given an option to avail these services separately.

ii.    Data Masking and Platform Neutrality: The OPs do not share with the RPs any information or data about the customers to whom they are providing the services. Moreover, the OPs use such data for their own private labels. The informant also alleged that the OPs engage in dual role by which they list their own private labels and cloud kitchens, thereby creating an inherent conflict of interest in the platform’s role as intermediary on one hand and as a participant on the other hand.

iii.   One sided contract: The OPs enter into unfair and one-sided contracts with the RPs which allowed the OPs to terminate the contract unilaterally.

iv.    Price Parity Terms: That the OPs enforce price parity on the RPs as per which, RPs are mandated to maintain parity between the prices listed on the OPs platform and other channels including other food delivery platforms, and RPs’ own direct channels.

v.     Exclusivity: That the OPs enforce exclusivity on the RPs and require them to commit to one food delivery platform.

vi.    Exorbitant commission: That the commissions charged by the OPs from the RPs are very high.

vii.   Deep discounting: That the OPs engage in deep discounting through schemes and incentives offered by them to the customers.

CCI observed that in a case alleging vertical restraints, it is not necessary to delineate a relevant market. In its analysis, CCI prima facie found that the OPs apply vertical restraints on the RPs in relation to: (i) mandating price parity; (ii) enforcing exclusivity. Further, CCI also observed that the OPs have presence in the downstream market through private labels and cloud kitchens, resulting in potential conflict of interest which needs to be investigated. However, in relation to bundling of services, delayed payments, one-sided clauses in the agreement, and exorbitant commission, CCI concluded that they don’t affect the competition in the market.

[1] Case No. 16 of 2021.