Business / Zomato, Swiggy force restaurants to give discounts, claims NRAI

New Delhi: Ease of Doing Business for MSMEs: Days after reaching out to the country’s competition regulator Competition Commission of India to highlight alleged anti-competitive practices of Swiggy and IPO-bound Zomato, restaurant body National Restaurant Association of India (NRAI) on Monday said it has now submitted “additional information with evidence” against said practices with CCI.

The information filed on July 12, according to NRAI, highlighted concerns viz., first, the exorbitant commission charged by Zomato and Swiggy in the range of 25 to 35 per cent of the order value in 2020-21; second, numerous instances of delay in payment by Zomato and Swiggy which has affected the entire cash flow of our partners; third, Zomato and Swiggy forcing restaurant partners to give discounts on their platforms to maintain good visibility on the platform.

“They have shifted the entire cost burden on the restaurants. A combined effect of (1) to (3) is that a lot of our partners are in extreme stressful conditions and are on the verge of closing. The restaurants are running at a loss since they cannot meet their expenses, yet they had to rely on Zomato and Swiggy due to the pandemic curbs and sentiments,” NRAI said in a statement. Fourth, NRAI added that these food aggregators are threatening to delist the restaurants if they do maintain price parity.

“We have filed the information with CCI and the response and action are something that CCI will take. We have previously engaged with Zomato and Swiggy multiple times over the issues that are there on the table with CCI now. There is certainly the interest of the restaurants here and that’s why we have been engaging with these companies and moved CCI. We have recently suggested alternatives like order direct for restaurants to serve customers directly,” Prakul Kumar, Secretary General, NRAI told Financial Express Online.

Zomato didn’t comment for this story. Swiggy declined to comment.

NRAI had approached CCI on July 1, 2021, citing multiple areas of concern to a number of its partner restaurants in the country that had to shut shop “due to onerous terms imposed” by the two food delivery startups. Bundling of services, data masking, and exorbitant commission charged; price parity agreements; forcing the restaurant partners to give discounts to maintain appropriate listing; and exclusivity of listed restaurants were challenges shared with CCI.

“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 in providing a level playing field for each player in the marketplace,” Anurag  Katriar, President, NRAI.