Competition Commission Clears Zomato After Review of Food Pricing Complaints and Fee Scrutiny

Competition Commission Clears Zomato After Review of Food Pricing Complaints and Fee Scrutiny​

The Competition Commission of India (CCI) has concluded its examination into a complaint filed against Eternal Limited, previously known as Zomato. The case scrutinized allegations concerning anti-competitive conduct, excessive commissions, and the imposition of arbitrary "platform fees" on consumers and restaurant partners within the online food delivery sector.

The Informant's concerns highlighted the exploitative pricing structure inherent in digital food ordering, alleging that platforms leverage their dominant market position to extract unjust enrichment from both consumers and partner restaurants across India.

Consumer Allegations Over Platform Pricing and Fees​

The complaint focused on a significant price disparity experienced by the consumer while attempting to purchase an identical food item through the Zomato platform versus purchasing it directly from the restaurant. The allegations included charging excessive commissions upon restaurant partners, forcing restaurants to inflate their menu prices, and imposing arbitrary fees without corresponding service value.

A central grievance revolved around the "platform fee," which the Informant contended had been drastically escalated. It was noted that this fee, initially introduced at a low rate, increased dramatically, constituting over 645% escalation within less than three years, lacking transparent rationale or service enhancement justification.

Price Comparison Reveals Substantial Premium​

To substantiate the claims of price inflation, the Informant provided a detailed comparison focusing on a single food item, "Ghee Pongal," purchased from Sree Ariya Bhavan. The direct purchase of this item at the restaurant cost only INR 105/- inclusive of GST.

Conversely, purchasing the same food through the Zomato platform resulted in a total payable amount of approximately INR 198/-. The difference of INR 93/- was attributed to combined charges including delivery costs, the "platform fee," and additional taxes. This disparity represented an approximate 88% increase compared to the direct restaurant price.

Commission Rules Out Prima Facie Case Against Platform​

The CCI, after reviewing all submissions, concluded that there appears no requirement of delineating the precise relevant market in this matter. The Commission found that a prima facie case contravention of Sections 3 or 4 of the Act is not made out against Eternal Limited.

The ruling stated that online food platforms inherently provide additional services such as platform and delivery services. Since commissions are often paid by restaurants, there exists a model where they may shift costs to consumers by adding them into the menu price. The Commission observed that the business models for dining in a restaurant and ordering through an online delivery service remain distinct, meaning price variance is expected between the two models.

The complaint, which sought relief including investigation directives and correction of pricing methods, was therefore ordered to be closed forthwith under Section 26(2) of the Act. The Commission noted that while consumers undoubtedly incur costs for platform services and delivery, the charges are subject to necessary scrutiny within the market structure.