Why is the National Restaurant Association of India Irked With Swiggy, Zomato

Image used for representational purposes only.

(Photo Courtesy: iStock / Altered by The Quint)

The National Restaurant Association of India (NRAI) has approached the Competition Commission of India (CCI), a competition regulator, alleging food aggregators Zomato and Swiggy's involvement in anti-competitive practices.

"Keeping the interest of restaurants in India in mind and how they have been affected by the inherently anti-competitive practices of Zomato and Swiggy, the NRAI on 1 July filed an information with the CCI highlighting the following practices by Zomato and Swiggy, which have an appreciable adverse effect on competition," the industry body said in a statement.

This development has come amid the tussle between restaurants and food delivery platforms over the issue of massive discounts offered by food aggregator apps to customers, which restaurants say is hurting their business.

What Happened?

NRAI has alleged that Swiggy and Zomato are indulged in creating a monopoly by charging exorbitant commissions from restaurants and 'masking customer' data from them.

Anurag Katriar, President, NRAI, said: "We have been in constant dialogue with the food service aggregators over the last 15-18 months to resolve some critical issues impacting the sector. However, despite all our efforts, we have unfortunately not been able to resolve them with the aggregators."

It is worth noting that since 2018, restaurants have been facing numerous issues in their dealing with the marketplace platforms, Swiggy and Zomato.

What Are The Issues?

Here are some of the major accusations made by NRAI:

• Deep Discounting: NRAI in a statement accused that aggregators have forced restaurant partners to give discounts to maintain appropriate listing.

• Masking Data: Collecting customer data and feedback review in an analogous format, to cater to the likes and preferences of their clientele. Thereby, creating monopoly.

• Violation of Platform Neutrality: Restaurants alleged the commissions paid by them affected their search rankings, and sought greater transparency in listing policies of online food aggregators.

• Bundled delivery services: The NRAI has also claimed that food aggregators have made it mandatory for restaurants listed on the platform to also use its delivery services.

What is the CCI Saying?

So far, CCI has not commented or passed any orders regarding the accusations made by the NRAI.

However, last year, an e-market study carried out by the Competition Commission of India (CCI), revealed the practice of data masking by online aggregating platforms which has raised concerns of the anti-competitive practice in the restaurant industry.

What Are Delivery Apps Saying?

Swiggy and Zomato have not put out any official clarification on the allegations made by NRAI.

Anurag Katriar, President of NRAI, informed that the restaurant body has been in constant dialogue with the food service aggregators over last 18 months to resolve critical issues impacting the sector.

“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. We have, therefore, approached the CCI now to look into the matter and investigate them thoroughly,” he added.

What's Next?

CCI may order a probe into the accusations made by NRAI or it can also dismiss the complaint.

Meanwhile, NRAI is also planning to launch an app in an attempt to take on Swiggy and Zomato.

According to a report by The Economic Times, NRAI aims to launch the app within two months. “We are in the final stages of finalising details with an established tech partner to whom we are outsourcing the back-end management,” Katriar said, as quoted by ET.

Whatever happens, the ongoing turf war between foodtech and NRAI might end up impacting the end user who would have to live with high prices and poor service delivery.

"Consumers will have to bid good bye to happy hour menu deals if amendments on flash sales are allowed to be a part of new regulation. It’s time to move beyond lip-service and take all stakeholders onboard while designing protocols for digital commerce", Sharat Chandra, an emerging tech Evangelist told The Quint.