Domino’s Pizza India franchise may discontinue taking orders on popular food delivery apps Zomato and Swiggy. This disclosure was made by Domino’s holding firm Jubilant FoodWorks in a confidential filing with the Competition Commission of India (CCI).
The company, according to a Reuters report, in a letter to the CCI on July 19 said, “In case of an increase in commission rates, Jubilant will consider shifting more of its businesses from online restaurant platforms to the in-house ordering system."
The CCI had sought responses from Domino’s India franchise and several other restaurants as part of an investigation on alleged anti-competitive practices of Zomato and Swiggy. As part of the response, Domino’s India also said that during July, about 27 per cent of its business in India was generated from online platforms, including its mobile app and website.
The CCI initiated the probe in April into Zomato and Swiggy after the National Restaurant Association of India (NRAI) had alleged these apps of preferential treatment, exorbitant commissions and other anti-competitive practices.
The restaurant body also alleged that commissions charged by Zomato and Swiggy were in the range of 20-30 per cent, where were “unviable".
According to the Reuters report, a senior industry executive with direct knowledge, who declined to be named, said Zomato’s and Swiggy’s commissions were a concern for Domino’s and many other restaurants. “If commissions are increased further, they will lead to profit squeeze of businesses and will simply be passed on to consumers."
The CCI Probe Into Zomato, Swiggy
The CCI in April ordered an investigation into alleged unfair business practices of food delivery platforms Zomato and Swiggy, after the NRAI raised concerns over the platforms’ dealing with restaurant partners. It had alleged that the companies offered their facilities to some brands for additional fees or rental commissions.
The NRAI had urged the CCI to investigate the companies for breaching platform neutrality by providing priority to exclusive contractors. It also alleged that Zomato had used consumer data to build cloud kitchens.
The competition watchdog in its order said, “The Commission is of the view that prima facie a conflict of interest situation has arisen in the present case, both with regard to Swiggy as well as Zomato, because of the presence of commercial interest in the downstream market, which may come in the way of them acting as neutral platforms."
In response to this, Zomato in a regulatory filing said it will explain to the competition watchdog that it is in compliance with relevant laws and said it intends to “promptly comply with any recommendations given to us by the Hon’ble Commission… We will continue to work closely with the Hon’ble Commission to assist them with their investigation and explain to the regulator why all of our practices are in compliance with competition laws and do not have any adverse effect on competition in India."