According to non-public documents prepared by the Competition Commission of India (CCI), Zomato signed “exclusivity agreements” with its partners in exchange for lower commissions, while Swiggy guaranteed business growth if certain players were listed exclusively on its platform.

Exclusivity arrangements between Swiggy, Zomato and their respective restaurant partners “prevent the market from becoming more competitive”, the CCI’s investigations arm said in its findings reviewed by Reuters on Friday.

The antitrust investigation into Swiggy and its biggest rival Zomato began in 2022 after the National Restaurant Association of India complained about the impact of the platforms’ alleged anti-competitive practices on food outlets.

The CCI documents are not publicly available in line with confidentiality rules and were shared with Swiggy, Zomato and the complaining restaurant group in March 2024. Their findings have not been previously reported.

Zomato declined to comment while Swiggy and CCI did not respond Reuters questions.

Zomato’s shares were flat in earlier trading, falling 3% following the Reuters report.

Swiggy’s IPO prospectus mentions the CCI case as one of the “internal risks” and states that “any breach of Competition Act provisions could lead to significant fines”.

The CCI report stated that Swiggy told researchers that the “Swiggy Exclusive” program has been phased out in 2023, but the company “plans to launch similar program (Swiggy Grow) in non-metropolitan cities.”

Food delivery giants Swiggy and Zomato have reshaped the way Indians order food in recent years; Hundreds of thousands of points of sale are listed on their apps, just as smartphone usage and online ordering are growing rapidly.

Swiggy and Zomato, which closed bids on Friday for a $1.4 billion IPO, India’s second-largest IPO this year, have also forced restaurants to maintain price parity in recent years, directly reducing competition in the market by preventing restaurants from offering lower prices in other markets. Online platforms according to CCI documents.

It was revealed that Zomato imposes pricing and discount restrictions on its restaurant partners, and in some cases includes a “penalty provision” if the outlet fails to comply.

CCI’s investigation arm stated that some of Swiggy’s partner restaurants “faced the threat of their rankings being downgraded if they did not maintain price parity”.

The next and final phase of the CCI case is a decision to be made by the CCI leadership, which is currently reviewing the investigation findings to decide on any penalties or changes in orders in Swiggy and Zomato’s business practices.

This decision may take several weeks, and companies still have the option to appeal the investigation findings with the CCI.

Zomato, which listed in 2021, has seen its shares more than triple in value to around $27 billion amid rising demand. Swiggy values ​​itself at $11.3 billion in its IPO.

Macquarie Capital estimates Swiggy’s food ordering values ​​in 2024-25 will be $3.3 billion, roughly 25% below Zomato’s.

Both are now rapidly diversifying into express trade, where food is delivered in as little as 10 minutes.

India’s largest retail distributor group has asked the antitrust authority to investigate the flash commerce businesses of Zomato, Swiggy and fellow rival Zepto over allegations of predatory pricing. Reuters was reported last month.

(Reporting by Arpan Chaturvedi; Editing by Elaine Hardcastle)