The Competition Commission of India (CCI) on April 4 ordered a probe into allegations of anti-competitive practices against food delivery companies Zomato Ltd and Bundl Technologies Pvt. Ltd which runs the Swiggy app, reported Mint.
Share price of Zomato dropped nearly three percent in early trade on April 5, 2022 following the report.
The probe ordered by CCI has come after a complaint filed by the National Restaurant Association of India (NRAI) which alleged the online platforms levying unilaterally decided commissions on restaurants, leading to entry barriers for new players, bundling of food ordering and delivery services without an option for restaurants to use their own delivery persons and being non-transparent with restaurants about customer details, the CCI said in its order, a copy of which was seen by Mint.
The allegations refer to Competition Act provisions that disallow agreements that cause an appreciable adverse effect on market competition. The CCI has asked its director general of investigation to complete the probe in 60 days.
Swiggy reported a 27 percent decline in its 2020-21 (FY21) operating revenue as lockdowns imposed to contain the spread of coronavirus hit demand for online food delivery during the period, regulatory filings show. The company reported consolidated operating revenues of ₹2,547 crore for FY21, against ₹3,468 crore in FY20. The company’s consolidated total income, too, was down 28% to ₹2,676 crore.
Zomato, which has been listed recently, saw its revenue falling by nearly a quarter year-on-year to ₹1,994 crore in FY21.
Shares of Zomato are now 49 percent down from their high of ₹169.10 on BSE.
Meanwhile, Zomato and Swiggy have stated plans to electrify their fleets by 2030. Brokerage house Ambit in a note illustrated how such transition is likely to prop up unit economics for Zomato and can electric vehicles (EVs) electrify the food delivery platform.
