The launch of quick food delivery apps by Zomato and Swiggy has upset restaurant owners. Raghav Aggarwal explains why the National Restaurant Association of India believes this amounts to selling of private labelled food, taking advantage of the customer data of their restaurant partners
What has NRAI said?
THE National Restaurant Association of India (NRAI)which claims to represent over 500,000 restaurants, has said it may approach the Competition Commission of India (CCI) against food delivery platforms Zomato and Swiggy for launching their respective quick food delivery (QFD) apps – Bistro and Snacc. The NRAI said the two are selling their own private labels on these QFD apps, violating marketplace neutrality and intellectual property rights (by selling similar products).
Sagar Daryani, president of NRAI and CEO of Wow! Momo, said ,”As long as these aggregators are okay working with restaurants and enable restaurants to go quick, we’re absolutely fine with it. But we will not want to be demolished as an industry where they end up selling products similar to those of ours.”
NRAI also noted that these aggregators have access to data around demand and deliveries, which they do not share with the partner restaurants. Now, they can use this data for their own QFD platforms. This, NRAI said, would create an uneven playing field for the players and undermine the principle of fair competition.
Where do these concerns stem from?
ALBINDER DHINDSA, CEO of Blinkit, under which Zomato has launched Bistro, has said that Bistro would offer “high-quality, canteen-style food delivered hot in 10 minutes”. The food is prepared at and delivered from a centralised location. He also said Blinkit is investing heavily in infrastructure and research and development to create dishes within five minutes or less.
Swiggy’s Snacc also services orders from dark stores. It offers a menu that includes categories like Indian Breakfast, Coffee, Bakes, and Cold Beverages. Some items are sourced from third-party providers, while others are tied to brands such as Blue Tokai and The Whole Truth. This is different from the model used by Swiggy in Bolt, where it ties up with restaurant partners for quick delivery.
However, the NRAI believes this is just another way of selling private labelled food and restaurants will be “severely impacted” by this.
Response of Zomato & Swiggy
WHILE ZOMATO DID not issue any statement, Dhindsa defended the launch of Bistro and said that the new platform operates independently without using any data from its Gurugram-based parent. He said Bistro is not built within Zomato and has a standalone team with a standalone app. In a post on social media platform X, he said that Bistro would never use Zomato even for marketing, even if it may lead to the company incurring a “significant additional cost”. However, the platform did not say anything on Zomato’s Everyday offering. Everyday promises to deliver food made by real home chefs in 30 minutes, but according to people in the know, the orders are sent out from centralised locations much like dark stores. When approached for a comment on this by FE, Zomato did not respond.
Swiggy has not commented on NRAI’s objections around data privacy and breach of trust.
What happens if CCI finds them guilty?
LEGAL EXPERTS SUGGEST that if the NRAI approaches the CCI against the two food aggregators and their allegations are proven, the platforms could face legal actions under the Competition Act, 2002.
According to Rahul Sundaram, Partner, IndiaLaw LLP, these may include penalties of up to 10% of the two platforms’ respective turnovers, cease-and-desist orders to halt unfair practices such as deep discounting, predatory pricing, exclusivity agreements or platform parity clauses, and structural remedies like altering business operations. The CCI could also mandate compensation for affected restaurants and monitor compliance. Additionally, the platforms may face civil suits from restaurants. Such actions could set a regulatory precedent for fair competition in the food aggregator market. However, the final decision from the CCI may take time.
NRAI’s previous bout with the two
THE NRAI HAD approached the CCI in 2021 against Zomato and Swiggy, alleging preferential treatment of some restaurant partners (RPs). The antitrust body had then, in 2022, ordered a detailed investigation into the matter. The probe found that the two entities were engaged in anti-competitive practices, including allegedly extending preferential treatment to some restaurant partners. The industry body said it has reviewed the redacted investigation report that was sent to it in March 2024. While ordering the detailed probe, the CCI had stated that preferential treatment accorded to the RPs, in which these platforms have an equity or revenue interest, can create barriers for the existing RPs to compete on fair terms. It also stated that price parity clauses mentioned in the agreements of Zomato and Swiggy appear to indicate significant restrictions where the RPs are not allowed to maintain lower prices or higher discounts on any of their own supply channels or on any other aggregators.