(General Studies II – Polity section – Statutory, Regulatory and various Quasi-judicial Bodies.)
- In November 2024, India’s Competition Commission (CCI) concluded that leading food delivery platforms, Zomato and Swiggy, breached antitrust laws by favouring certain restaurants through exclusivity contracts and price parity clauses.
- This finding underscores the challenges in maintaining fair competition in India’s rapidly growing digital economy.
Case Overview –
The CCI’s investigation, initiated in 2022 following a complaint from the National Restaurant Association of India, revealed that Zomato and Swiggy engaged in practices detrimental to market competition. These practices included:
- Exclusivity Contracts: Agreements that restricted partner restaurants from collaborating with competing platforms.
- Price Parity Clauses: Mandates preventing restaurants from offering lower prices on other platforms or their own channels.
Such arrangements limited consumer choices and hindered the growth of smaller competitors.
Relevant Legal Framework –
The Competition Act, 2002, serves as India’s primary legislation to promote competition and prevent anti-competitive practices. Key provisions pertinent to this case include:
- Section 3(1): Prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition.
- Section 3(4): Addresses anti-competitive vertical agreements, such as tie-in arrangements and exclusive supply or distribution agreements.
The CCI’s findings suggest that Zomato and Swiggy’s practices violated these provisions by imposing unfair restrictions on restaurant partners.
Role and Functioning of the CCI –
Established under the Competition Act, 2002, the CCI is tasked with:
- Preventing Anti-Competitive Practices: Investigating and curbing agreements and practices that adversely affect competition.
- Promoting and Sustaining Competition: Ensuring markets remain competitive for the benefit of consumers and businesses.
- Protecting Consumer Interests: Safeguarding consumers from unfair trade practices and ensuring fair market access.
In this case, the CCI’s proactive investigation highlights its commitment to maintaining market fairness, especially in the digital sector.
Reform Suggested to Overhaul CCI |
Competition Law Review Committee (2019): Established by the Ministry of Corporate Affairs, this committee proposed several reforms: Structural Changes: Introducing a ‘Green Channel’ for automatic approval of certain mergers and acquisitions to expedite the process. Strengthening Enforcement: Enhancing investigative powers and ensuring timely disposal of cases to improve enforcement efficiency. Digital Economy Focus: Updating the Act to address challenges posed by the digital economy, including issues related to data privacy and market dominance by tech giants. 2. Standing Committee on Finance (2020): This parliamentary committee emphasized: Autonomy and Accountability: Ensuring the CCI operates independently while being accountable, suggesting a balance between autonomy and oversight. Capacity Building: Investing in training and resources to equip the CCI to handle complex cases, especially in the digital and technology sectors. 3. National Institute of Public Finance and Policy (NIPFP) Report (2021): Commissioned by the CCI, this report recommended: Market Studies: Conducting regular market studies to proactively identify and address anti-competitive practices. Advocacy Initiatives: Enhancing competition advocacy to promote a culture of competition among businesses and consumers. These recommendations collectively aim to fortify the CCI’s role in fostering a competitive, fair, and dynamic market environment in India. |
The CCI’s findings against Zomato and Swiggy emphasize the importance of fair competition in India’s digital economy. As digital platforms continue to influence consumer behaviour, regulatory vigilance is crucial to prevent monopolistic practices and ensure a level playing field for all market participants. |