More than 500 small to midsized restaurant companies has put an allegation on online delivery companies like Zomato, Swiggy & others that they are misusing the dominant position, by signing an online petition addressed to the Competition Commission of India (CCI) and the Prime Minister’s Office (PMO) to this effect.
In their petition they have made some accusations which include the use of deep discounting, in-house kitchens and internal sourcing. The companies have been continuously found to misuse their dominant position with the aim to wipe out small and medium enterprises.
Rahul Singh, president of the National Restaurant Association of India (NRAI) said,”Unlike retail, FDI (foreign direct investment) restrictions are not applied on the restaurant sector or food service aggregators.” He also added, “Predatory practices will be examined by the CCI. As an association, we have a roundtable discussion next week with all four major food delivery aggregators to address deep discounting and the cloud kitchen issue which is adversely affecting the restaurant industry.”
Anurag Katriar, chief executive of deGustibus Hospitality, said, “Deep discounting by online food delivery platforms is impacting footfalls and diverting consumer traffic to these platforms,” he said. “Besides, the cost of doing business is escalating because commissions are directly getting impacted. These are hurting us in the long run.”
In response to that Zomato spokesperson said, “Discounts are merely a mechanism to encourage user participation and all our restaurant partners can choose to participate in a discounting campaign.”
In the petition it is mentioned that Swiggy had started its own in-house kitchen, The Bowl Company, to “monopolise the market.” “They (Swiggy) are unethically diverting customers to their own kitchen,” the petition said. “A client is required to pay huge tariffs to get their products listed on the platform; however, the first ad which is shown to an end-user on logging in is Swiggy’s in-house kitchen – The Bowl Company.” The petition said this amounts to “misusing the customer database.”
Swiggy denied that it sought to push users in any particular direction. “We do not practice diversion of traffic to any brand unethically,” a spokesperson said.”We doubled the number of restaurant partners on the platform to over 55,000. The commissions we charge are a function of the value we generate for our partner and are mutually agreed upon.