NRAI moves CCI highlighting competition issues with Zomato and Swiggy

In what could be troublesome for IPO-bound Zomato, the National Restaurants Association of India (NRAI) has filed information with the Competition Committee of India (CCI) against the company and its rival Swiggy claiming that their practices have "appreciable adverse effect on competition".

Issues such as bundling of services, data masking, deep discounting, lack of transparency and exorbitant commission are highlighted in the submission.

"We have been in constant dialogue with the food service aggregators over the last 15-18 months to resolve critical issues impacting the sector.  However, despite all our efforts, we have unfortunately not been able to resolve them with the aggregators.  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," Anurag Katriar, President of NRAI said in a statement.
Since 2018 , the restaurants have been facing numerous issues in their dealing with the two marketplaces.

The restaurants have claimed that over a period of time the business practices of Zomato and Swiggy started hurting the food and beverages (F&B) industry massively.

According to NRAI, during the pandemic, the magnitude of anti-competitive practices of the two companies increased manifold and despite numerous discussions the companies failed 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 shops," NRAI said in a statement.

While Swiggy has just raised $800 million in a new round of funding valuing the company at $5 billion, Zomato is all set to raise $1.2 billion through its initial public offering (IPO), paving the way for one of the most keenly awaited share sales in recent history.

The Securities and Exchange Board of India (SEBI) is likely to announce the approval of the IPO today.