NRAI moves CCI against foodtech cos
- It submitted info on ‘anti-competitive’ practices followed by Zomato, Swiggy
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Industry body National Restaurant Association of India (NRAI), on Monday said it has approached the Competition Commission of India (CCI) with evidence to back “anti-competitive" practices such as data masking and charging exorbitant commissions by food aggregators Zomato and Swiggy, signalling further escalation of conflict between restaurants and food delivery platforms.
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NRAI said it submitted detailed information to CCI on 1 July on practices followed by food aggregators that are hurting the industry.
“During the pandemic, the magnitude of anti-competitive practices of Zomato and Swiggy have increased manifold and despite numerous discussions with them, these deep funded marketplace platforms are not interested to alleviate the concerns of the restaurants. In fact, during the pandemic, due to onerous terms imposed, a lot of our partners had to shut shop," NRAI said in a statement on Monday.
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Other than not sharing customer data with restaurants and charging hefty commissions, in its petition to the CCI, NRAI also raised concerns over deep discounting—that it says pushes restaurant partners to give discounts to maintain appropriate listing.
Lack of transparency and neutrality on aggregator platforms were also red-flagged, apart from imposition of price parity agreements that restrict sellers or service providers from offering their goods or services at lower prices on other platforms. NRAI also highlighted exclusive deals that offer some listed restaurants better terms of engagement on the platforms.
To be sure, food delivery is expected to be a $11 billion market in the next five years, estimates by CLSA suggest. Frequent usage is set to drive demand for aggregators, apart from the benefit of convenience and assortment. Zomato is set for a much-anticipated stock-market listing. Neither Zomato nor Swiggy responded to Mint's queries on the issues raised by NRAI.
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Anurag Katriar, President of NRAI said that despite constant dialogue with food service aggregators over last 15-18 months to resolve critical issues impacting the sector, “the needle hasn’t moved much on these issues".
“We have therefore approached the CCI now to look into the matter and investigate them thoroughly," said Katriar.
The complaints have been framed in the context of the competition law, with evidence to support each of these violations, said Thomas Fenn, member, NRAI’s managing committee.
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The move comes as the pandemic has swayed the market in favour of home deliveries. The dine-in business has remained under pressure owing to intermittent lockdowns. Consequently, the prominence of aggregators has grown in the food business service ecosystem.
In the last few months NRAI has batted for building direct orders business as an alternative to the large aggregators to lower costs of deliveries and gain more control over the data of diners they serve.
NRAI—that represents the interest of over 5,00,000 restaurants—has in the past raised concerns against aggregators with the Department for Promotion of Industry and Internal Trade (DPIIT).
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In 2019, restaurants launched a campaign against food aggregators and even logged out of the platforms over deep discounts and steep commissions.
NRAI was particularly concerned over Zomato Gold membership that offered several incentives to diners.
“Since 2018 onwards, the restaurants have been facing numerous issues in their dealing with the marketplace platforms, Swiggy and Zomato. When these marketplace platforms started, they had certain advantages, however, over a period, their business practices started hurting the food and beverages industry massively," NRAI said in a statement.
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As a part of the 2020 e-commerce study published by the Competition Commission of India (CCI) NRAI also sent recommendations to the CCI and participated in various workshops conducted under the aegis of CCI highlighting various practices which are conducted by these marketplace platforms Swiggy and Zomato.
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