Zomato’s Platform Fees, Delivery Charges Not Unfair Or Discriminatory: CCI

The Competition Commission of India (CCI) has ruled that platform fees, food prices and delivery charges levied by the foodtech major Zomato do not amount to unfair or discriminatory conduct.

As per Live Law, a bench comprising chairperson Ravneet Kaur and members Anil Aggarwal, Sweta Kakkad and Deepak Anurag held that these charges do not constitute abuse of dominant position under Section 4 of the Competition Act, 2002.

The ruling follows a complaint filed by Lalit Wadher, who accused Zomato of anti competitive practices and abuse of market dominance. 

The commission found no prima facie abuse of dominant position by Zomato and held that no investigation is required to be conducted.

Wadher also alleged that the foodtech giant’s pricing strategy is detrimental to consumers, pointing out that food items listed on the platform are often 20 to 30% costlier than their offline counterparts. 

He also raised concerns over the company’s dominant market position, suggesting it limits consumers’ access to fair pricing.

In addition to inflated food prices, Wadher alleged that Zomato imposes multiple charges, including platform fees, delivery charges, packing fees, donations, and tips, without offering an opt-out option.

However, the  commission noted that Zomato does provide clear and accessible options for users to opt out of voluntary payments such as donations and tips. It further observed that the absence of printed food prices on packaging does not give rise to any competition concerns.

The informant also pointed out that while the platform fee had increased from INR 5-6, there had been no noticeable improvement in the app’s features or services. He further claimed that the app failed to take responsibility for complaints related to food quality or delivery issues.

Despite these concerns, the CCI found no merit in the allegations, concluding that Zomato’s practices do not violate the provisions of the Competition Act.

Zomato’s Bitter-Sweet Relation With Anti-Competition Practices

While today’s wording from CCI might have come in Zomato’s favour, there have been previous instances of the competition watchdog’s crackdown on the platform. 

A Reuters report last year pointed out that Zomato, along with Swiggy, has been found guilty of violating competition laws by engaging in practices favouring select restaurant partners, thereby limiting market competitiveness.

In addition to this, the restaurant bodies like the National Restaurant Association of India (NRAI) and the Federation of Hotel & Restaurant Associations of India (FHRAI) were also mulling legal action against both foodtech majors over private labelling.

Both bodies have also alleged that these food aggregators force deep discounts on restaurants, charge high commissions for order fulfilment and pressure restaurants to advertise on their platforms.