CCI Investigation Finds Zomato and Swiggy in Breach of Antitrust Laws
- November 9, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
CCI Investigation Finds Zomato and Swiggy in Breach of Antitrust Laws
Sub: Eco
Sec: National income and Indian economy
- Overview:
- India’s Competition Commission of India (CCI) investigation has found that food delivery platforms Zomato and Swiggy violated competition laws.
- The investigation began in 2022 after a complaint by the National Restaurant Association of India (NRAI), which raised concerns about the platforms’ impact on restaurant competition.
- Anti-Competitive Practices Identified:
- Exclusivity Contracts: Zomato engaged in exclusive partnerships with select restaurants in exchange for reduced commissions, while Swiggy offered business growth guarantees to restaurants that agreed to list exclusively on its platform.
- These exclusive arrangements led to reduced market competition by creating a bias towards certain restaurant partners.
- Market Impact:
- The exclusivity deals made it harder for other restaurants to compete, as the platforms’ practices favored certain businesses, impacting smaller and independent food outlets.
- The CCI’s investigation arm reported that such practices hindered fair market competition in the food delivery space.
Antitrust Law in India: Antitrust Law (also known as Competition Law) aims to safeguard fair trade and commerce by preventing practices that hinder competition, such as monopolies, price-fixing, and unfair restraints. It ensures the existence of fair competition in an open-market economy, promoting consumer welfare and innovation.
The Competition Act, 2002: The Competition Act, 2002 is India’s primary antitrust law, enacted to replace the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), based on the recommendations of the Raghavan Committee.
Key Provisions of the Competition Act, 2002
- Prohibition of Anti-competitive Agreements: Agreements that result in price-fixing, market allocation, or output restriction are considered anti-competitive.
- Abuse of Dominant Position: The law prevents businesses from abusing their market dominance to exploit consumers or eliminate competition.
- Regulation of Combinations: Mergers, acquisitions, and joint ventures are regulated to ensure they do not harm competition or create monopolies.
Competition Commission of India (CCI): The Competition Commission of India (CCI) is the primary statutory body for enforcing the Competition Act. It is responsible for investigating anti-competitive practices, advising the government on competition-related matters, and ensuring that the market remains competitive.
Composition: The CCI is composed of a Chairperson and six members, all appointed by the Central Government.
Competition Appellate Tribunal (COMPAT) and NCLAT: Initially, the Competition Appellate Tribunal (COMPAT) was established to hear appeals against the CCI’s decisions. However, in 2017, the government replaced COMPAT with the National Company Law Appellate Tribunal (NCLAT), which now handles appeals related to competition law matters.