With Zomato all set to launch its IPO, both platforms have managed to raise funds in the backdrop of a restaurant industry body seeking a CCI probe into alleged anti-competitive practices.
The Competition Commission of India approved SoftBank’s proposed investment in Swiggy, the Commission revealed in a tweet on Monday.
Commission approves the proposed acquisition of certain stake in Bundl Technologies (Swiggy) by SVF II Songbird (SoftBank Group entity) pic.twitter.com/ucLnHgOaIy
— CCI (@CCI_India) July 12, 2021
Separately, Swiggy also elevated Phani Kishan to a co-founder role. Kishan, who joined Swiggy in 2015, previously served as the company’s Vice President of Strategy and Investments.
The news comes weeks after the National Restaurant Association of India (NRAI) asked the Competition Commission of India (CCI) to investigate “inherently anti-competitive practices” of online food-delivery platforms Zomato and Swiggy, and days after Zomato announced the date for its initial public offering (IPO).
According to Economic Times, SoftBank has already invested over $2 billion in India over the first five months of the year. The company recently invested in social commerce platform Meesho and banking technology platform Zeta.
Although CCI did not reveal the size of the stake, Business Standard reported in April that SoftBank’s Vision Fund II is looking to invest $450-million in the food delivery platform at a $5.5 billion valuation. This news came a week after Swiggy raised around $800 million from new and existing investors. In total, the food aggregator has raised $1.25 billion in 2021.
NRAI Asks CCI To Look Into Anti-Competitive Practices By Zomato, Swiggy
“During the pandemic, the magnitude of anti-competitive practices of Zomato & Swiggy have increased manifold and despite numerous discussions with them, these deep-funded marketplace platforms are not interested to alleviate the concerns of the restaurants,” the NRAI stated in a press release.
The issues that NRAI has asked CCI to probe include:
- Bundling of services
- Data masking
- Exorbitant commissions
- Deep discounting
- Price parity agreements
- Violation of platform neutrality
- Lack of transparency
- Vertical integration
- Exclusivity of listed restaurants
On July 12, NRAI filed additional information with CCI regarding the alleged anti-competitive practices. NRAI alleged that restaurants are threatened to get delisted if they offer better rates through other channels, forced to give discounts, charged exorbitant commissions, and given delayed payments.
Swiggy’s arch-rival Zomato is all set to raise Rs 9,375 crore ($1.25 billion) from its IPO, which will remain open between July 14 to July 16.
According to RedSeer, Zomato is the category leader in the food delivery space in India. The company had 169,802 active delivery partners and 148,384 active food delivery restaurants during the month of March 2021, Zomato’s red herring prospect (RHP) stated. Furthermore, India’s food services market is expected to grow to US$110 billion in 2025, the prospect stated. The IPO makes Zomato the first online food aggregator from India to go public.
Zomato is also looking to acquire a 9.3 percent stake in online grocery delivery platform Grofers, giving competition to Swiggy’s grocery delivery service Instamart.
- Zomato Set To Acquire 9.3 Percent Stake In Grofers, Seeks CCI Approval
- Zomato And Swiggy Resume Services After Saturday Crackdown On Delivery Agents In Hyderabad
- Zomato IPO: The Company’s Business, Risks, And COVID-19 Impact