Zomato has responded to a report that said the food delivery firm, along with its peer Swiggy, was found guilty of found guilty of violating competition laws.

What Happened: An investigation by the Competitions Commission of India (CCI) found Zomato and Swiggy guilty of favouring certain restaurants on their platforms, thereby breaching antitrust laws, according to a Reuters report. 

Zomato was found to have entered into “exclusivity contracts” with partners in exchange for lower commissions, while Swiggy promised business growth to certain players if they listed exclusively on its platform, the report said.

Zomato, in a letter to BSE, confirmed the investigation but said that it had already informed the exchanges of the probe that was initiated in 2022. In its previous disclosure, Zomato said that the CCI had initiated an investigation into certain aspects of its business.

“In their order, the Hon’ble Commission has mentioned that it has prima facie not found concerns with respect to our independence on levy of commissions or alleged bundling of services, while it would want to investigate aspects such as preferential listing of restaurant partners and pricing parity across platforms, etc,” Zomato’s 2022 statement said.

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The CCI’s investigation arm reportedly found that the companies directly limited competition in the market by preventing restaurants from offering lower prices on other online platforms.

Zomato imposed pricing and discount restrictions on its restaurant partners, and in certain cases, included a “penalty provision” for outlets that did not comply. On the other hand, some of Swiggy’s partner restaurants were “threatened that their rankings will be pushed down, if they do not maintain price parity”. 

The investigation was initiated after the National Restaurant Association of India lodged a complaint about the alleged anti-competitive practices of these platforms. The findings, which are confidential, were reportedly shared with Zomato, Swiggy, and the complainant restaurant group in March.

Zomato said that since the 2022 intimation, the CCI has not passed any order, and therefore no disclosures were made by the company.

Price Action: Zomato was trading 2.09% higher at ₹253.92 on Monday afternoon. the company’s shares had declined by over 3% after the report was published on Friday.

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