Shares of food aggregator Zomato slipped 5 per cent to hit an intraday low of Rs 82.15 on BSE after the Competition Commission of India (CCI) ordered a probe into the operations and business models of food delivery majors, Swiggy and Zomato pertaining to alleged violations of Section 3(1) and 3(4) of the Competition Act.
India’s anti-monopoly watchdog has ordered a probe into food delivery apps Zomato and Swiggy over alleged unfair pricing practices as well as other issues flagged last year by a restaurants’ association in a complaint to the regulator. CCI has asked its director-general to submit a report on the matter in 60 days.
The CCI on 4 April 2022 ordered an investigation into alleged anti-competitive trade practices by food-ordering platforms Zomato and Swiggy. The order comes against the backdrop of complaints made by the National Restaurant Association of India (NRAI) against the food tech giants.
“The Commission is of the view that there exists a prima facie case with respect to some of the conduct of Zomato and Swiggy. Which requires an investigation by the director-general (DG), to determine whether the conduct of platforms have resulted in contravention of the provisions,” the CCI noted.
Other Competitor
Competition Commission on Monday ordered a detailed probe against food delivery platforms, Zomato and Swiggy, for alleged unfair business practices with respect to their dealings with restaurant partners.
The order comes months after the National Restaurant Association of India (NRAI) asked the CCI to investigate the companies for breaching platform neutrality by providing priority to exclusive contractors.
The watchdog’s probe arm — Director General (DG) — will investigate the case and submit the report in 60 days.
The regulator said that “prima facie there exists a conflict of interest situation, warranting a detailed scrutiny into its impact on the overall competition between the RPs vis-à-vis the private brands/entities which the platforms may be incentivized to favor”.
The order was issued on the complaint filed by the National Restaurant Association of India (NRAI). Which represents over 50,000 restaurant operators across the country.
The association had approached the antitrust body in July last year, seeking a probe into the allegations of data masking, deep discounting, and violation of platform neutrality against Zomato and Swiggy.
“During the (Covid-19) pandemic, the magnitude of anti-competitive practices of Zomato and Swiggy have increased manifold and despite numerous discussions with them. These deeply funded marketplace platforms are not interested in alleviating concerns of the restaurants,” it had claimed.
NRAI alleged that the commissions that are charged from restaurants are “unviable” and “are to the tune of 20 percent to 30 percent, which is extremely exorbitant”.
Zomato Stock
Zomato stock hit a 52-week low of Rs 75.55 apiece on 16 March 2022, tumbling over 55 per cent from its all-time high of Rs 169.10, touched in November last year. In traded volume terms, a total of 14.66 lakh shares exchanged hands on BSE, while 2.4 crore shares traded on NSE, so far in the trade.
“Technically, 76-78 is a very strong support zone. 89 remains a strong resistance. As long as 76-78 support is held on a daily basis, investors can hold the stock,” AR Ramachandran, Co-founder & Trainer, Tips2Trades,
