By Aditya Kalra and Arpan Chaturvedi

NEW DELHI (Reuters) – An investigation by India’s antitrust body has found that SoftBank-backed food delivery giants Zomato and Swiggy broke competition laws with their business practices favoring certain restaurants listed on their platforms, documents show.

Zomato entered into “exclusivity contracts” with partners in return for lower commissions, while Swiggy guaranteed certain players increased business if they listed exclusively on its platform, according to non-public documents compiled by the Competition Commission of India (CCI).

The exclusivity arrangements between Swiggy, Zomato and their respective restaurant partners “prevent the market from becoming more competitive”, the CCI’s investigative panel noted in its findings reviewed by Reuters on Friday.

The antitrust investigation against Swiggy and its main rival Zomato began in 2022 after a complaint by the National Restaurant Association of India about the impact of the platforms’ alleged anti-competitive practices on grocery stores.

The CCI’s documents are not public, as per its privacy rules, and were shared with Swiggy, Zomato and the plaintiff restaurant group in March 2024. Their findings were not previously reported.

Zomato declined to comment, while Swiggy and CCI did not respond to Reuters’ queries.

Shares of Zomato fell 3 percent after the Reuters report, from unchanged in previous trades.

The CCI case is mentioned as one of the “internal risks” in Swiggy’s IPO prospectus, which says “any violation of the provisions of the Competition Act may attract substantial monetary penalties”.

The CCI report noted that Swiggy told investigators that the ‘Swiggy Exclusive’ program has been phased out in 2023, but the company “plans to launch a similar program (Swiggy Grow) in non-metropolitan cities”.

Food delivery giants Swiggy and Zomato have reshaped the way Indians order food in recent years, with hundreds of thousands of stores listed on their apps right when they use their smartphones and online ordering, both of which have grown rapidly.

Swiggy, which on Friday is closing bids for its $1.4 billion IPO – India’s second-biggest this year, and Zomato have both in recent years pushed restaurants to maintain price parity, directly reducing competition in the market, preventing restaurants from offer lower prices for other online platforms, CCI documents state.

Zomato was found to have imposed restrictions on restaurant partners’ prices and discounts and in some cases included a “penalty provision” if the store did not comply.

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