The Competition Commission of India (CCI) has closed an antitrust complaint against Eternal (formerly Zomato), holding that allegations of abusing its dominant position by charging higher food prices than restaurants, imposing platform and delivery fees, and adopting unfair pricing practices have not disclosed a prima facie contravention of the Competition Act.
The order has been passed by a bench comprising Chairperson Ravneet Kaur and Members Sweta Kakkad and Deepak Anurag while considering a complaint filed by R. Suresh, as per media reports. The Commission has held that charging higher prices on online food delivery platforms does not amount to anti-competitive conduct. It has observed, “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 complainant has claimed that he paid Rs 198 for a plate of Ghee Pongal ordered through Zomato, while the same item had cost Rs 105 when purchased directly from the restaurant. According to the complaint, the difference arose from a higher base food price on the platform, along with delivery charges, platform fees and taxes.
He has further alleged that restaurants have been compelled to increase prices on the platform to offset commissions and advertising expenses charged by Zomato. The complaint has also contended that the platform fee increased from around Rs 2 per order in 2023 to Rs 14.90 without any corresponding enhancement in services. It has sought an investigation into alleged excessive commissions, unfair pricing practices, exploitative charges and anti-competitive commercial arrangements, along with discontinuation of the platform fee and disclosure of its pricing methodology.
The Commission has observed that the allegations relating to higher food prices, platform fees and delivery charges essentially concern alleged unfair pricing under Section 4 of the Competition Act and have not required further analysis under Section 3. It has noted that online food delivery platforms operate as multi-sided platforms, charging consumers platform and delivery fees while collecting commissions from restaurants, which may pass those costs on through higher menu prices. The Commission has further 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 regulator has also noted that the complainant relied on the price of a single low-value food item to demonstrate an 88% price difference. It has 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 has observed that the additional charges relate to additional services and that consumers can choose whether to proceed with or reject an order until the final stage of placing it. It has held that the practice does not raise any competition law concerns.
Holding that no prima facie case of contravention under Sections 3 or 4 of the Competition Act has been made out, the Commission has closed the complaint.
