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NRAI files additional info with CCI, says Zomato, Swiggy force restaurants to offer discounts

Restaurants association claims that the aggregators have shifted the entire cost burden of discounts to the restaurants. There have also been instances of some restaurant partners being de-listed for offering better rates to other channels, it says.

July 12, 2021 / 05:57 PM IST
Representative image

Representative image

Further to the complaint filed with the Competition Commission of India (CCI) early this month, the National Restaurant Association of India (NRAI) has filed an additional information against IPO-bound Zomato and rival Swiggy, claiming that the two online platforms force restaurants to give discounts while charging them exorbitant commissions and delaying payments.

In a recent interaction with Moneycontrol, Zomato co-founder Gaurav Gupta and CFO Akshant Goyal had said that the company, along with restaurants, fund the discounts offered to customers.

However, in its complaint, NRAI claimed that the aggregators have shifted the entire cost burden to the restaurants.

The NRAI also claimed that the aggregators threaten to de-list restaurants if they maintain ‘price parity’. There have been instances wherein some partners have been de-listed from platforms since they offer better rates to other channels.

“Ever since the news of us filing information against the food aggregators with the CCI came out in the public domain, we have received an overwhelming support from our restaurant partners and the industry, in general. Many members have shared their personal experiences of misuse of power by these food aggregators. This prompted us to file some additional information with the CCI to ensure that our continued efforts to safeguard the interests of the F&B industry will bear fruit, and this, in turn, will help provide a level-playing field for each player in the marketplace," said Anurag  Katriar, NRAI president.

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According to NRAI, Zomato and Swiggy charged commission in the range of 25-35 percent of the order value in 2020-21.

Earlier this month, NRAI had complained to the CCI that the practices followed by Zomato and Swiggy have “appreciable adverse effect on competition”.

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

Since 2018, restaurants have been facing numerous issues with the two marketplaces.

During the interaction with Moneycontrol, the Zomato management also claimed that the issues highlighted by NRAI were “misplaced”, adding that they haven't received any communication from CCI till then.

Zomato's Rs 9,375-crore IPO opens this week, kicking off India's first big public listing from the consumer Internet space, and a crucial test case for other unicorns that plan to list later this year.

Zomato's much-anticipated public listing comes at a time when the Indian startup ecosystem is witnessing a funding frenzy, with startups raising $12.1 billion in the first six months of 2021, according to data from Venture Intelligence.

Swiggy, on the other hand, just raised $800 million in a new round of funding, valuing the company at $5 billion.
Priyanka Sahay
first published: Jul 12, 2021 05:57 pm

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