Online food delivery giants Zomato and Swiggy have responded to recent media reports about the Competition Commission of India's (CCI) investigation into their alleged anti-competitive practices, dismissing them as “misleading.” Both companies clarified that the antitrust body has yet to pass any final order on the matter.
This comes after a Reuters report claimed that the CCI's investigation had found evidence of anti-competitive conduct, including agreements that allegedly favoured select restaurant chains on the platforms. These findings were said to have been shared with the companies and restaurant groups involved in March 2024.
As businesses and investors alike monitor regulatory developments closely, particularly in the wake of significant market dynamics, the situation has triggered discussions on the broader implications for share market investment. Investors often look at regulatory investigations as key factors influencing company stock performance and market sentiment.
CCI's preliminary findings and the response from Zomato
The CCI’s investigation into the business practices of Zomato and Swiggy began after a complaint from the National Restaurant Association of India (NRAI) in April 2022. The NRAI raised concerns about the exclusivity agreements between the platforms and their restaurant partners, suggesting these agreements could harm competition in the online food delivery market.
Zomato issued a statement in response, asserting that it has been in full compliance with India’s competition laws. The company highlighted that the CCI had issued a "prima facie" order on April 4, 2022, which led to the investigation but clarified that, as of now, no final order or decision had been made. Zomato expressed its commitment to working closely with the CCI to demonstrate that its practices do not violate any competition laws and have no adverse effects on market competition.
According to Zomato, the findings shared in the March 2024 report are not final, and the news report misrepresents the situation. The company reiterated that the investigation is ongoing and that it is confident of the legality of its operations under Indian laws.
Swiggy's clarification and position on the matter
Swiggy also responded to the news reports, emphasising that the ongoing investigation by the CCI was still at a preliminary stage. In its statement, Swiggy made it clear that the report conflated the investigative process with a final ruling. The company pointed out that the CCI’s investigation, initiated by a 2022 order, was still in progress. A hearing has not yet taken place, and no final decision has been reached regarding potential competition law violations.
Swiggy stated that it has been fully cooperative with the CCI’s inquiry and would continue to work within the framework of Indian competition laws. The platform also noted that it had mentioned the CCI investigation in its Red Herring Prospectus for its Initial Public Offering (IPO), which concluded recently.
Implications for the market and ongoing developments
The ongoing investigation into Zomato and Swiggy has captured the attention of analysts and investors alike, with many keeping an eye on how the CCI’s final decision could impact share market investment in these companies. The resolution of such cases often has significant consequences for stock prices and market confidence.
However, as both Zomato and Swiggy have stated, the matter is far from concluded, and the market will have to wait for the final ruling from the CCI before drawing conclusions.
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