Zomato and Swiggy Breached Competition Laws, Finds CCI Probe
INTRODUCTION
Zomato and Swiggy are two big food delivery platforms of India. Both the startups have come under scrutiny by the Competition Commission of India (CCI). This reveals that the startups have used some exculsivity contracts with restaurant partners to breach the antitrust laws. Zomato and Swiggy Breached Competition Laws for their own benefits. This thing has raised questions about the fairplay in the digital marketplace and has sent shockwaves through food delivery industry.
Recently, there was a raid in the warehouse of Zomato hyperpure. It was said that this was a hype created by the media against the startup and now this breach of the laws has acted like a salt on the wound.
ZOMATO AND SWIGGY Breached Competition Laws
The investigation has found that Zomato entered into some “exclusivity laws’ which would guarantee lower commissions and hence high business potential. According to the source, Swiggy confirmed various businesses that if they are listed on the platform, then it would guarantee business growth to them. Basically, these type of arrangements are not in accordance with the laws as they prevent the market from being competitive.
These documents are not public and so we do not have access to the same. The food delivery market was filled with competitors like Ubereats, Tinyowl, Swiggy, Zomato etc. But now, you see these two competitors mostly. Both these startups act at the same time. If one startup increases the platform fee, other will do the same. This is like a duopoly which might have some unseen broader implications in the food delivery system of India.
DECISION PENDING
If Zomato and Swiggy Breached Competition Laws to increase their profits. Then it might have to pay for the loss. Although the decision is still pending, yet his case might serve as a reminder for everyone. Everyone should know that there is a border line between innovation and market growth. Even if this looks like a remarkable GTM strategy, it is against the laws of the country. Let us wait how things work out, will it be in the favour of the Startups or against it.
Till then, stay connected !!
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