Fast delivery companies Zomato, Swiggy, Zepto face India antitrust case over discounts
NEW DELHI, March 6 (Reuters) – Indian consumer products distributors have filed an antitrust case against big fast-delivery businesses of Zomato, Swiggy and Zepto, calling for an investigation into alleged deep discounting practices, legal papers show.
India’s e-commerce sector has faced intense scrutiny over how products are priced online. An antitrust investigation last year found Amazon and Walmart’s Flipkart favour select sellers and resorted to “predatory pricing”, which hurts smaller retailers. The companies have denied the allegations.
Quick commerce, in which companies deliver consumer products within 10 minutes from neighbourhood warehouses, is popular with customers but has upset smaller retailers as shoppers use apps to order everything from milk to pulses. Bernstein estimates India’s quick commerce sector will reach $35 billion in 2030, from $200 million in 2021.
The All India Consumer Products Distributors Federation (AICPDF), in a case filing with the Competition Commission of India, has asked for an investigation into many business practices of Zomato’s (ZOMT.NS)
“An alarming trend of predatory pricing and deep discounting practices by Q-commerce platforms resulted in unfair pricing models,” said the group’s filing, which is not public but was reviewed by Reuters.
Zomato and Swiggy did not respond to Reuters’ requests for comment. Zepto declined comment. The CCI did not respond.
The filing could increase headaches for Zomato and Swiggy. A separate CCI investigation last year found their food delivery businesses breached competition laws. The case is ongoing.
Zepto is preparing for an IPO after raising funds at a valuation of $5 billion last year.
The watchdog will review the case filing and can order its investigation unit to look at the matter closely. This can take several months and may require companies to explain their businesses. It can dismiss the case if it finds no merit in it.
AICPDF has 400,000 distributors as members, who supply products of brands such as Nestle (NEST.NS), opens new tab, Unilever (ULVR.L) and Tata to 13 million retail shops across India.
A recent Datum Intelligence survey of 3,000 Indian quick commerce shoppers showed 36% had reduced shopping at supermarkets and 46% cut back purchases from small independent stores.
In its filing, AICPDF said local brick-and-mortar stores “cannot match” the quick commerce giants’ discounts. It compared online and offline pricing of 25 products, including of Nestle and Hindustan Unilever (HLL.NS)
A variant of a Nescafe coffee jar which a small independent Indian retailer receives from companies for about 622 rupees ($7.14) is offered for 514 rupees on Zepto, 577 rupees on Swiggy Instamart and 625 rupees on Blinkit, according to the filing.
