CCI Closes Antitrust Complaint Against Zomato Over Higher Food Prices, Platform Fee

The Competition Commission of India (CCI) on Thursday closed a complaint against Eternal Limited (formerly Zomato Limited), holding that allegations that the online food delivery platform abused its dominant position by charging higher food prices than restaurants, imposing platform and delivery fees, and adopting unfair pricing practices did not prima facie disclose any contravention of the Competition Act.

A coram of Chairperson Ravneet Kaur and Members Sweta Kakkad and Deepak Anurag was considering an information filed by R. Suresh. The competition regulator held that charging such prices did not amount to anti-competitive conduct.

"The Commission is of prima facie view that the same may not be considered as abusive as selling food items through online platforms includes other services like platform services, delivery services etc.", the Commission ruled.

The informant claimed that he paid ₹198 for a plate of Ghee Pongal ordered through Zomato, while the same item cost ₹105 when purchased directly from the restaurant. According to him, the difference arose from a higher base food price on the platform, delivery charges, platform fee and taxes.

He alleged that restaurants were compelled to increase prices on the platform to offset commissions and advertising expenses charged by Zomato. He further contended that the platform fee, which had increased from around ₹2 per order in 2023 to ₹14.90, was imposed without any corresponding enhancement of service.

Alleging excessive commissions, unfair pricing practices, exploitative charges and anti-competitive commercial arrangements, the informant sought an investigation against Zomato. He also sought discontinuation of the platform fee, disclosure of its pricing methodology and other consequential relief.

The Commission observed that the allegations relating to higher food prices, platform fee and delivery charges essentially concerned alleged unfair pricing. It held that those allegations fell for consideration under Section 4 of the Competition Act and that no further analysis under Section 3 was required

The Commission observed that online food delivery platforms operate as multi-sided platforms. They charge consumers platform and delivery fees while collecting commissions from restaurants, which may pass those costs on to consumers through higher menu prices.

It therefore observed, "A consumer who is not able to go to the restaurant to have food may avail services of online food platforms by paying additional charges including delivery charges, platform fee etc. The business model of selling food items through restaurant and online food delivery services are different. So, price of a food product varies in both the models."

The commission also noted that the informant had relied on the price of a single low-value food item to demonstrate an 88% price difference.

It observed, "If the price of the food item is high, percentage difference in price would accordingly decline as the delivery charge is a fixed charge and it may vary depending on the distance."

On the allegation of drip pricing, the Commission observed that the additional charges were for additional services. It noted that consumers could choose whether to proceed with or reject the order until the final stage of placing it. The Commission held that the practice did not raise any competition law concern.

Holding that no prima facie case of contravention of Sections 3 or 4 of the Competition Act was made out, the Commission closed the complaint.