Zomato offers upto 60% discount for whole month amid allegations of anti-competitive practices

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July 07, 2021 5:25 PM

Zomato is celebrating its birthday month by giving out up to 60 per cent discounts to people who order food from the app.

Under the name of ‘No Cooking July,’ the food delivery company rolled out many discount options for this month.

Zomato is celebrating its birthday month by giving out up to 60 per cent discounts to people who order food from the app. Under the name of ‘No Cooking July,’ the food delivery company rolled out many discount options for this month and the move comes amid allegations being made against the company for anti-competitive pricing. In an email shared by the company to all its users, Zomato informed regarding 60 per cent discounts on select outlets. There are other discounts as well that range between 10 per cent and 50 per cent applicable till July 31, 2021.

Now, the National Restaurants Association of India (NRAI) moved the Competition Commission of India (CCI) on Monday alleging that food aggregators like Zomato and Swiggy have charged “exorbitant commissions” from restaurants, thus violating laws. NRAI released a statement saying that since the pandemic, the magnitude of anti-competitive practises have increased by food aggregators. “Despite numerous discussions with them, these deep funded marketplace platforms are not interested in alleviating the concerns of the restaurants. In fact, during the pandemic, due to onerous terms imposed, a lot of our partners had to shut shop,” the NRAI said in a statement.

On the current discounting offered by Zomato, Anurag Katriar, President- NRAI told Financial Express Online that “discounts are funded entirely by the restaurants and Zomato does not shell out any money towards these discounts. Only restaurants with very high AOV (upwards of Rs 1200) can perhaps absorb this cost but considering that the AOV is around INR 380-400, this is unsustainable.”

According to the NRAI, restaurants were forced to offer deep discounts in order to maintain an “appropriate” listing on the online platforms. The association further highlighted that to keep themselves listed on the platform, restaurants have to agree to the terms. They are then benefitted with lower commissions. However, those who do not participate in deep discounting schemes are susceptible to lower visibility on the online platform.

An email sent to Zomato remained answered.

The CCI had earlier commissioned a study where many restaurants alleged that the commission they paid can affect their search rankings, and therefore sought more transparency in the listing policies of online food aggregators. Food aggregators have also been accused of mining data to promote cloud kitchens by NRAI.

However, in the same e-commerce study by the CCI, the food aggregators have stated that data masking is crucial when it comes to customer privacy and claimed that they provided the data which was crucial for restaurants to improve their performance as per customer review and rating. The online platforms have also stated that they have not mandated it for the restaurants to participate in deep discounting schemes. CCI is yet to review allegations by the NRAI.

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