The government-backed Open Network for Digital Commerce (ONDC), along with food and grocery delivery players such as Ola, Magicpin, and fintech firm Paytm are meeting the National Restaurant Association of India (NRAI) in Delhi on January 21 evening on the issue of “private labelling” by quick commerce platforms.
The meeting follows NRAI’s recent opposition to platforms such as Zomato and Swiggy venturing into quick commerce food delivery through private-label brands on separate apps such as Snacc and Bistro.
“While the private labelling may benefit a few players, this is counter-productive for a lot of smaller restaurants and players. We will be sharing our inputs with NRAI on the issue,” one of the persons who will be at the meeting told Moneycontrol on condition of anonymity.
Food delivery, data wars
Private labelling, where platforms launch their in-house brands, has drawn criticism for allegedly eating into the market share of restaurant partners who rely on these companies for visibility and sales. The practice can harm the long-term sustainability of the food service ecosystem, NRAI has said.
It has also accused these platforms of leveraging data and algorithms to prioritise their brands over partner restaurants, creating an uneven playing field.
“We will be sharing our inputs regarding the private-labelling issue that’s going on now. NRAI will take this matter to the commerce ministry to elaborate on the issue,” a source said, labelling the practice "anti-competitive".
The meeting is an opportunity to address restaurants’ concerns and seek fair solutions for all stakeholders, sources familiar with the matter, sources said.
While Ola, ONDC and Magicpin declined to comment, Paytm could not be reached.
On January 9, NRAI, which represents five lakh Indian restaurants, said it would be approach the Competition Commission of India (CCI) against Swiggy and Zomato for allegedly flouting anti-competitive norms, the copyright act and related laws.
Through their newly launched standalone 10-minute food delivery apps, Swiggy and Zomato are engaging in private labelling, it said. They are monetising proprietary data derived from restaurant partners to help their private labels gain an unfair advantage, the restaurant body alleged.
NRAI is already fighting Swiggy and Zomato in CCI over alleged anti-competitive practices. A recent probe by the anti-trust body found that the food delivery firms breached competition laws, with their business practices favouring restaurant chains listed exclusively on their platforms.
Though there is no specific law regulating private labels in India, under Section 3 of the Competition Act, 2002, any anti-competitive agreements that reduce competition or create a dominant position are prohibited.
The act also prohibits the abuse of a dominant position by an enterprise or group, which can result in denial of market access or if the enterprise or group “uses its dominant position in one relevant market to enter into, or protect, another relevant market”.
In December, both Ola and Magicpin announced a foray into the quick food delivery space via ONDC, taking on Swiggy and Zomato.
Ola Dash – the Bhavish Agarwal-led company’s quick food delivery app available in Bengaluru – has started delivering food in 10 minutes via ONDC.
Similarly, Magicpin, which claims to be India’s third-largest food delivery app, also started 15-minute food deliveries in select cities. As many as 90 percent of food delivery orders on ONDC are coming through the hyperlocal delivery app, said Magicpin CEO Anshoo Sharma.
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