Restaurants association to approach CCI over ‘anti-competitive’ practices of food apps

NRAI is also seeking clarity from DPIIT to classify food aggregators such as Swiggy and Zomato as e-commerce marketplaces.
Restaurants association to approach CCI over ‘anti-competitive’ practices of food apps
Restaurants association to approach CCI over ‘anti-competitive’ practices of food apps

As the National Restaurant Association of India (NRAI) continues negotiations with food aggregators such as Zomato, the association is now making representations to the government and regulatory authorities over the pain points being faced by restaurants. This includes the Competition Commission of India (CCI) and the Department for Promotion of Industry and Internal Trade (DPIIT).

The NRAI is set to approach CCI to look into practices of food aggregator services. According to Anurag Katriar, President of NRAI, issues with aggregators include terms of engagement, which he says are lopsided and not equal.

“Several actions of food aggregators are anti-competitive. For example, they seek exclusivity with restaurant partners. And they also dictate terms. Unless you take their entire bouquet of services from taking orders to deliveries, they don’t want o onboard restaurants. These go against the very basic realm of e-commerce. We are approaching CCI for that,” Anurag told TNM.

The second issue is regulatory, where Anurag says there is a lot of confusion as to what category or industry food aggregators come under. NRAI has made representations to DPIIT seeking clarity over the same.

In mid-2019, DPIIT met with Swiggy, Zomato, UberEats, among others to resolve issues between them and restaurants. Following this, CCI called a meeting with NRAI and EY to seek recommendations over the e-commerce policy.

As the government is in the process of formulating an e-commerce policy, NRAI wants DPIIT to clarify if aggregators such as Swiggy and Zomato are classified as e-commerce marketplaces.

“If not e-commerce, what would they be? Definitely not logistics. They’re a marketplace. There are buyers and sellers and that is e-commerce. We don’t have a doubt, but we’d rather hear that from the authorities,” Anurag says.

The NRAI has been at loggerheads with Zomato and others over 6 months over deep discounting, its Gold program, uneven commission charges, data masking, among other issues.

In October, along with Federation of Hotel & Restaurant Associations of India (FHRAI), the apex bodies of the Hotel and Restaurant Industry in India, restaurants had identified 15 core grievances against Zomato and other aggregators which also included high penalties, unreasonable charges, bringing of private labels, unreasonable rules of engagement, threats of dropping rating of restaurants, among others.

However, deep discounting was one of the main issues. Restaurants complained that they were having to bear the cost of the discounts offered by the likes of Zomato and Swiggy. This was eating into the business; which restaurants say already runs on thin margins.

Zomato Gold was another main issue. While Zomato claims helps restaurants increase footfalls, restaurants felt that it was a program that only promoted deep discounts, which had to be borne by restaurants.

While most issues with other aggregators were resolved, NRAI is in continuous discussions with Zomato over its charter of demands.

“These decisions take time since they involve change in policy and terms of engagement. It’s still a work in progress,” Anurag said.

TNM has reached out to Zomato for a statement and will update the copy when the company responds. 

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