NRAI Files Anti-Competitive Practices Case Against Zomato & Swiggy

Issues such as bundling of services, data masking and deep discounting have been flagged in the submission

NRAI Files Anti-Competitive Practices Case Against Zomato & Swiggy
NRAI Files Anti-Competitive Practices Case Against Zomato & Swiggy
PTI - 05 July 2021

Restaurant industry association NRAI said on Monday that it had asked fair trade regulator CCI for a comprehensive investigation into Zomato and Swiggy, on a day food delivery service Zomato got permission from the Securities and Exchange Board of India (Sebi) to raise Rs 8,250 crore through an initial public offering (IPO).

Zomato, a food delivery service, has got permission from the Securities and Exchange Board of India (Sebi) to earn Rs 8,250 crore through an initial public offering (IPO).

According to the draught red herring prospectus, the initial public offering (IPO) would include a fresh issue of equity shares worth Rs 7,500 crore and an offer-for-sale by Info Edge (India) Ltd for Rs 750 crore.

According to an update with the regulator on Monday, Zomato, which submitted preliminary IPO papers with Sebi in April, received its observation on July 2.

The Sebi's observation is critical for any business planning to undertake a public offering, such as an initial public offering (IPO), a follow-on public offering (FPO), or a rights issue.

The proceeds from the new issuance, according to the draught documents, would be used to fund organic and inorganic growth efforts, as well as general company objectives.

Zomato and Swiggy are fighting for market dominance in the online meal delivery industry, which has witnessed substantial development in recent years.

The National Restaurant Association of India (NRAI) filed information with the Competition Commission of India (CCI) on July 1 in the interest of restaurants and how they have been harmed by Zomato and Swiggy's "inherently anti-competitive activities," according to a statement.

The letter included concerns about service bundling, data masking, and excessive fees, as well as deep discounting, platform neutrality violations, and a lack of transparency, the report added.

"We have been in constant dialogue with the food service aggregators over last 15-18 months to resolve critical issues impacting the sector. "However, despite all our efforts, we have unfortunately not been able to resolve them with the aggregators. The needle hasn't moved much on these issues," NRAI President Anurag Katriar said.

NRAI has therefore approached the CCI now to look into the matter and investigate them thoroughly, he added.

"We are committed to the cause of our partners, and we will put our best efforts with the CCI to ensure that the practices of these marketplace platforms are aligned to the benefit of the entire F&B industry," Katriar said.

E-mails sent to Zomato and Swiggy seeking comments on the matter did not elicit any immediate response.

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