Exclusive-India finds Zomato and Swiggy food delivery companies violated antitrust laws, documents reveal

By Aditya Kalra and Arpan Chaturvedi

NEW DELHI (Reuters) – An investigation by India’s antitrust agency has found that food delivery giants Zomato and SoftBank-backed Swiggy violated competition laws with their business practices favoring select restaurants listed on their platforms, a report found documents.

Zomato entered into ‘exclusivity contracts’ with partners in return for lower commissions, while Swiggy guaranteed business growth to certain players if they listed exclusively on its platform, according to non-public documents prepared by the Competition Commission of India (CCI).

Exclusivity arrangements between Swiggy, Zomato and their respective restaurant partners “prevent the market from becoming more competitive”, the CCI’s research arm noted in its findings reviewed by Reuters on Friday.

The antitrust probe against Swiggy and its top rival Zomato began in 2022 following a complaint by the National Restaurant Association of India over the impact on food retailers of alleged anti-competitive practices by the platforms.

The CCI documents are not public, in accordance with confidentiality rules, and were shared with Swiggy, Zomato and the complainant restaurant group in March 2024. Their findings have not been previously reported.

Zomato declined to comment, while Swiggy and the CCI did not respond to queries from Reuters.

Shares in Zomato fell 3% after the Reuters report, after remaining flat in earlier trading.

The CCI case is listed as one of the “internal risks” in Swiggy’s IPO prospectus, which states that “any violation of the provisions of the Competition Act could attract significant monetary penalties.”

The CCI report noted that Swiggy told researchers that the ‘Swiggy Exclusive’ program was being phased out in 2023, but the company “plans to launch a similar program (Swiggy Grow) in non-metro cities.”

Food delivery giants Swiggy and Zomato have changed the way Indians order food in recent years, as hundreds of thousands of outlets listed on their apps when using a smartphone and online ordering have both grown rapidly.

Swiggy, which closes bids on Friday for its $1.4 billion initial public offering – India’s second-largest this year, and Zomato have also pushed restaurants in recent years to maintain parity in prices, easing competition the market was directly reduced by preventing restaurants from offering lower prices in other markets. online platforms, the CCI documents said.

Zomato was found to have imposed price and discount restrictions on restaurant partners, and in some cases included a “punitive measure” if the outlet failed to comply.