Introduction

The Competition Commission of India recently shut a case against Zomato for violation of the Competition Act. The Commission held that some of the allegations as made by the Informant could be looked into section 4 of the Act, i.e. abuse of dominant position, while some of the allegations do not raise competition concerns at all. As such, no case of violation is made out by the Informant and the matter was closed under section 26(2) of the Act.

Facts of the case

The facts of the case were such that the Informant was a senior citizen who had availed Zomato’s services on multiple occasions. Some of the key allegations as made by the Informant include Zomato charging 20-30% higher for a food dish as compared to its restaurant rate, opacity in the actual price of the dish and the company not taking any responsibility for the food items delivered by it. The Informant further alleged that there is no information when Zomato pays its restaurant partners which in itself could be a profit stream for the same. Last but not the least, the company levies various kinds of fees such as platform fee, delivery fee, packing fee, donations and tips which harms the consumer. The company has used its monopolistic power to levy excessive and undue charges.

Position of the CCI

The CCI held that the Informant has not alleged violation of any specific provision of the Act. Based on the submissions, it scrutinized the same under section 4 of the Act. The Commission held that various kinds of charges and fees levied by the Respondent do not appear to be unfair and discriminatory in nature. Additionally, payment of tips is optional in nature and one can opt out of the same. Lastly, the issue of edibility of food and non-availability of prices do not seem to raise any competition concern. As such, the matter needs to be closed.

Unresolved issues

The facts of the case touched upon various aspects of food-delivery business such as the prices being charged by the platform, levy of additional fees, terms & conditions on which the platform engages with restaurant partners and most importantly, exercise of monopolistic power which results in consumer harm. The Commission in this case has adopted a restrictive approach and failed to assess most of the allegations on merits. For instance, there is no rebuttal on whether there is parity between the prices being offered by a specific restaurant and the platform for a given dish. This is more so when the platform explicitly charges delivery fee for the service on offer. Similarly, the Commission shrugged off all other allegations on pricing which is considered one of the most sensitive issues under competition law, specifically when it comes to exercise of monopolistic power.

Way forward

The order passed by the CCI is final in nature. The Commission ought to have done some level of inquiry before closing the matter. As per settled position under the law, the Commission has vast inquisitorial, investigative, regulatory and adjudicatory powers. The Commission could have sought additional evidence in the form of documents from the Informant, or have served a notice to the Respondent to better appreciate the factual matrix of the case. The CCI has done a market study on competition concerns in the ecommerce sector in the past and the same could have come in handy. Last but not the least, the Commission could have clubbed the information with an already pending case against the company for similar allegations. All of this could have resulted in optimal utilisation of the resources.