Introduction:

In today’s fast-paced world, apps like Zomato, Swiggy, Uber Eats, and Food Panda have become an important part of our daily lives. A few years ago, ordering food online meant calling a restaurant, waiting long hours, or simply stepping out to eat. But now, most of us prefer ordering food through apps rather than walking into a restaurant. With just a smartphone in hand, we can scroll through dozens of restaurants and cafes of our choice, offering detailed menus, options, services, discounts, tempting deals, etc. With just a few taps on our phones, we can get hot meals delivered to our doorsteps quickly and easily.

All these food delivery giants started small but grew rapidly in India. They are easy to use, with a range of food options and handy features like order history, coupons, payment options, and categories of food choices and restaurants. All you need to do is download the app, enter your details, and place an order. We prefer ordering through these apps because of the comfort they offer. There’s no need to cook, no need to step out, or deal with crowded places, and if you are tired, not in the mood to cook, or have guests at home, you can just order whatever you feel like eating, at any time.

However, behind all this comfort and convenience, there is an unfair side to how these platforms operate, which somehow impacts the entire food industry. This blog aims to find out how these platforms are using their position in the market to benefit themselves, often at the cost of their own partners. And also, how some of their actions are being questioned under the Competition Act, 2002, for being unfair and anti-competitive.

Unfair and Anti-Competitive Practices by Food Service Aggregators (FSAs):  

The whole story came into the spotlight when, in 2022, the National Restaurant Association of India (NRAI) filed a complaint with the Competition Commission of India against Zomato and Swiggy, alleging that they are not just acting as delivery partners but are also engaging in anti-competitive practices, making it harder for small and independent restaurants to survive[i]. The aforesaid complaint was filed against the violation of Section 3 (4) r/w Section 3(1) of the Competition Act, 2002, highlighting several serious practices that are believed to go against the act. Let’s take a look at some of them:

Firstly, one of the major concerns raised by the NRAI is the forced bundling of services, which violates Section 19(3) of the act. Restaurants that want to be listed on these platforms are not allowed to use their own delivery staff, but are forced to use the delivery service provided by the platform. This is unfair to these partners as it leads to delays in food pickup and delivery at times when the delivery partners are unavailable[ii]. This directly affects their business, especially those who rely heavily on fast and regular deliveries.

Additionally, NRAI alleges that these FSAs do not share real customer data with the restaurants, even though the real transaction is between the restaurant and the customer[iii]. This is a major concern because if restaurants do not know who their customer are or what their preferences may be, how can they improve their service or build a loyal customer base? This lack of access to important data is a direct disadvantage for the restaurants in the industry[iv].

Another major contention raised by NRAI is that restaurants are not allowed to set their own prices freely. They are forced to keep the same prices at their physical outlets as those displayed on the app. This means they are bound not to offer lower prices or discounts to walk-in or daily customers, even if they want to. They feel pressured due to warnings by the FSAs of getting delisted or pushed down in the app’s search results. This kind of control limits the restaurants from competing fairly in the market.

Further allegations on FSAs are of burdening the restaurants with high commission rates, along with the costs of huge discounts offered by the apps to the customers. Simply, it means that if the restaurants wish to be more visible on the app, they are forced to offer deep discounts to attract customers, at their own cost. But this burden is not alone; it doubles when these popular platforms charge high commissions for their services from these restaurants. This makes it very difficult for small and medium-sized restaurants to survive, even if they get orders. And also, this practice seems to have an appreciable adverse effect on the competition (AAEC) in the Food delivery market, as the new or smaller players with better terms find it hard to attract the restaurants, mainly because of the strong presence and dominance of big players like Zomato and Swiggy[v].

Another serious problem that has surfaced is the introduction of Cloud Kitchens by these food delivery giants on their platforms. Also known as Ghost Kitchens, these are virtual kitchens that only offer online food delivery without having a physical dine-in space. Some of the examples are The Bowl Company, Goodness Kitchen, Homely, and Breakfast Express.   These kitchens are often run by the platforms themselves or in partnership with selected restaurants. The challenge is that the FSAs are now playing a double role in the market. On one hand, they act as a service provider that connects the restaurants with customers, and on the other hand, by launching their own cloud kitchens, they act as direct competitors to the very restaurants they host.

This situation is clearly unfair to partner restaurants, as they have to pay high commission rates, opt for deep discounting, manage the overhead rent and staff costs, and now, on top of that, they have to compete with such players that have no such burden. This gets even worse knowing that these competitors have access to exclusive customer data that can be used to promote their cloud kitchens smartly and swiftly. As a result, cloud kitchens gain a competitive edge while partner restaurants are left struggling with lower ratings and less visibility.[vi]

Legal And Regulatory Concerns

The practices followed by these FSAs have certainly raised legal and regulatory concerns under the Competition Act, 2002. Their activities trigger Section 3 (dealing with anti-competitive agreements) and Section 4 (dealing with abuse of dominant position), along with other provisions. No doubt, they are currently the dominant players in the food delivery market, with deep networks and exclusive arrangements with a large number of restaurant partners. Due to this dominance, the new entrants find it difficult to enter the market as restaurants are often hesitant to switch from the more established platforms. This creates an environment where FSAs face no real competition, allowing them to abuse their dominance by imposing conditions they wish on their partners, which directly violates the core spirit of the Competition Act, 2002.[vii]

These practices also have a widespread impact on consumers like us in many ways. Most of the time, they show us attractive discounts and deals, making us believe that we are getting the best options to choose from, but that is not always true. They usually show us what they want us to order, and not what actually fits our taste and budget. Additionally, we lack transparency regarding the use of our personal data by these platforms, because there is a lack of transparency. We are not even sure if our data is being used for the real purpose it was collected for, or if it’s being used for something else entirely.

The Way Ahead

No doubt, these food delivery giants have brought innovation and comfort to our lives. But we must also understand that unchecked dominance can be harmful, not just for restaurants (RPs), but also for consumers and the overall market. When one or two players control everything, it kills healthy competition and limits growth for others. That’s why there’s a strong need for better regulation and accountability. These platforms should be more transparent, both with restaurants and with customers. RPs deserve to know how they are ranked, why their visibility may be going down, and what feedback they’re receiving, so they can work on improvements and build stronger customer relationships. Also, FSAs should not be allowed to play a dual role—being both the service provider and the competitor by promoting their own cloud kitchens unfairly at the top. And finally, restaurants shouldn’t be so tightly bound that they can’t even use their own delivery staff when needed, especially in urgent or emergency situations.

Now, the responsibility lies with the Competition Commission of India to closely examine the situation and decide whether these platforms are actually abusing their dominant position or if they are simply operating in a normal and fair manner. It is up to the commission to ensure fair competition and protect the interests of all the stakeholders.

[i] National Restaurant Association of India v. Zomato India Ltd., 2022 SCC OnLine CCI 22, decided on 4-4-2022

[ii] (2022, April 6). CCI DIRECTS INVESTIGATION AGAINST ZOMATO AND SWIGGY FOR ALLEGED ANTI-COMPETITIVE PRACTICES. Competitionlawyer.in. Retrieved June 25, 2025, from https://www.competitionlawyer.in/cci-directs-investigation-against-zomato-and-swiggy-for-alleged-anti-competitive-practices/

[iii] ibid

[iv] Indulia, B. (2022, May 4). Conduct of Zomato and Swiggy, anticompetitive? DG to investigate. SCC Times. Retrieved June 25, 2025, from https://www.scconline.com/blog/post/2022/05/04/conduct-of-zomato-and-swiggy-anti-competitive-competition-commission-of-india-cci/

[v] Indurkhya, P., & Parmar, R. R. S. (2022, September 14). Antitrust Implications of Dual Role Played by Food Intermidiaries vis-a-vis the Recent Tussle Between NRAI and Zomato-Swiggy. Hnluccls.in. Retrieved June 25, 2025, from https://hnluccls.in/2022/09/14/antitrust-implications-of-dual-role-played-by-food-intermediaries-vis-a-vis-the-recent-tussle-between-nrai-and-zomato-swiggy/

[vi] Singh, A. K., & Malik, H. (2022, October 19). Antitrust Implications of Food Service Aggregator Owned Cloud Kitchens. Nlsir.com. Retrieved June 25, 2025, from https://www.nlsir.com/post/antitrust-implications-of-food-service-aggregator-owned-cloud-kitchens

[vii] Tiwari, A. (2022, October 25). The Food Service Aggregators (Zomato, Swiggy, etc.) and their pricing practices. Ssconline.com. Retrieved June 25, 2025, from https://www.scconline.com/blog/post/2022/10/25/the-food-service-aggregators-zomato-swiggy-etc-and-their-pricing-practices/