NRAI submits additional evidence to CCI against food aggregators on delayed payment

The National Restaurant Association of India (NRAI) filed further evidence with the Competition Commission of India (CCI) on Monday, July 12, claiming that in 2020-21, Zomato and Swiggy will charge a commission of 25 to 35 per cent of the order amount. According to NRAI, there have been multiple instances of Zomato and Swiggy delaying payment, which has impacted its partners' whole financial flow. 

NRAI gives evidence to CCI against food aggregators

According to the report, Zomato and Swiggy are pressuring restaurant partners to offer discounts on their platforms in order to maintain excellent visibility. The full expense burden has been passed on to the restaurants. The National Restaurant Association of India (NRAI) filed information with the Competition Commission of India on July 1 outlining Zomato and Swiggy's inherently anti-competitive conduct. 

Zomato and Swiggy's actions, according to NRAI, have had a crippling effect on restaurants and the ecosystem as a whole: (a) Service bundling, data masking, and outrageous commissions; (b) Price parity agreements; (c) Deep discounting: pressuring restaurant partners to provide discounts in order to keep suitable listing; (d) Exclusivity of listed restaurants. According to the report, Zomato and Swiggy are pressuring restaurant partners to offer discounts on their platforms in order to maintain excellent visibility. The full expense burden has been passed to the restaurants.

While Zomato's promoters have dismissed NRAI's concerns as unfounded, the organisation has received an enormous amount of support from ecosystem partners/restaurants across the country who have come forward and provided additional evidence to show how Zomato and Swiggy have used their market power, particularly during the pandemic, to impose terms on which restaurants have no choice. These deep-pocketed aggregators have harmed their partners' commercial interests and, as a result, the entire F&B ecosystem, according to NRAI. 

 Food aggregators charging exorbitant commissions

According to NRAI, the combined effect of these practices has left many of its partners in a state of tremendous stress and on the point of shutting down. The eateries are losing money because they are unable to cover their bills, but owing to the pandemic curbs and attitudes, they have had to rely on Zomato and Swiggy. If eateries do not maintain pricing parity, these food aggregators threaten to delist them. There have been occasions where some partners have been removed off the platform because they provided better pricing to customers through alternative channels.

The NRAI believes that the facts presented to the CCI will further emphasise Zomato and Swiggy's unfair business practices, and that the authority will investigate their actions.  NRAI President Anurag Katriar stated that since the news broke that "we were filing information with the CCI against food aggregators, we've gotten a lot of support from our restaurant partners and the industry in general. Many members have spoken out about how these food aggregators have abused their authority."

He said in a statement, "This prompted us to file some more material with the CCI in order to ensure that our ongoing efforts to protect the F&B industry's interests will bear fruit, resulting in a level playing field for all players in the marketplace. We are committed to our partners' cause, and we will work with the CCI to ensure that these marketplace platforms' practises are aligned to the benefit of the broader F&B industry."

Picture Credit: PTI