India’s Competition Commission of India (CCI) has found food delivery giants Zomato and Swiggy guilty of violating competition laws, according to a report by Reuters. According to documents cited in the report, the investigation alleged that both companies engaged in practices that favored select restaurant partners, thereby limiting market competition.

CCI’s investigation into Swiggy and Zomato began in 2022 following a complaint by the National Restaurant Association of India. He identified exclusivity agreements as a key issue. Key findings include Zomato’s “exclusivity agreements” with certain restaurants that allow them to reduce commission rates, and Swiggy’s growth guarantees only for restaurants listed on its platform. These regulations reportedly prevent new players from entering the market and stifle competition, ultimately disadvantaging consumers.

The investigation also highlighted that both companies pressure restaurants to provide consistent pricing across platforms. While Zomato has imposed pricing and discount restrictions, including penal provisions for non-compliance, Swiggy has reportedly warned its partners of possible ranking demotions if they offer lower prices elsewhere.

The findings, which are confidential under CCI regulations, were shared with Swiggy, Zomato and the National Restaurant Association of India in March 2024. Zomato declined to comment and Swiggy did not respond to queries. The results of the investigation have already affected Zomato’s shares, which fell 3% following the Reuters news.

This case has broader implications for Swiggy; especially since its $1.4 billion IPO is currently closing bids, making it India’s second-largest IPO this year. The investigation was cited as an “internal risk” in Swiggy’s IPO prospectus, warning that violations of competition laws could lead to serious penalties.

In response to the findings, Swiggy reportedly discontinued its “Swiggy Exclusive” program in 2023 but plans to introduce its “Swiggy Grow” program targeting non-metropolitan areas. Both companies have significantly reshaped India’s food delivery landscape and are expanding into “express commerce” offering grocery delivery in as little as 10 minutes; this sector is under separate scrutiny due to alleged predatory pricing.

CCI leadership is currently reviewing the investigation findings and a final decision on possible penalties or necessary operational changes is expected to be made soon. Both Swiggy and Zomato can appeal the final decisions through the CCI.

This reflects increased regulatory focus on India’s rapidly evolving digital market, as platforms such as Zomato and Swiggy pursue aggressive growth strategies amid compliance pressures in a highly competitive environment.