Zomato, Swiggy, Zepto face antitrust case over discount practices
What's the story
Zomato, Swiggy, and Zepto are being sued by consumer products distributors in an antitrust lawsuit. The complaint accuses these new-age companies of deep discounting practices. The All India Consumer Products Distributors Federation (AICPDF), has asked the Competition Commission of India (CCI) to probe the business practices of Zomato's Blinkit, Swiggy's Instamart, and Zepto. This includes looking into how they distribute their discounts.
Industry concerns
Quick commerce sector faces scrutiny amid discount practices
The emergence of quick commerce, where companies deliver consumer products within 10 minutes from local warehouses, has raised concerns among smaller retailers. AICPDF's filing notes, "An alarming trend of predatory pricing and deep discounting practices by Q-commerce platforms resulted in unfair pricing models." This comes amid growing scrutiny over how products are priced online in India's e-commerce sector.
Impact on retailers
AICPDF: Quick commerce giants' discounts hurt local stores
The AICPDF, which counts 400,000 distributors as members, contends that local brick-and-mortar stores "cannot match" the discounts provided by quick commerce giants. It compared online and offline pricing of 25 products, including those from Nestle and Hindustan Unilever. For example, a Nescafe coffee jar variant that a small independent Indian retailer gets from companies for about ₹622 is available for ₹514 on Zepto, ₹577 on Swiggy Instamart and ₹625 on Blinkit.
Legal proceedings
CCI's ongoing investigation into Zomato and Swiggy
The filing of this antitrust case could make things difficult for Zomato and Swiggy, who are already under the scanner. The CCI is already looking into their food delivery businesses for possible violations of competition law. Meanwhile, Zepto is preparing for an initial public offering (IPO) after raising funds at a valuation of $5 billion last year.