Beyond the Delivery Fee: How the Zomato-Swiggy Duopoly is Testing the Limits of India's Competition Laws

Written by Praval Bokade,  a law student pursuing BA. LLB from Symbiosis Law School, Pune.

Introduction

Food delivery companies like Zomato and Swiggy control about 90-95% of India's food delivery business, changing how consumers eat as well as how local restaurants operate. This power has caused huge corporate rivalries, including a threat made in August 2026 by nearly 1,000 restaurants in Bengaluru to boycott these platforms altogether. The latest saga gives rise to an important question: does India's competition law have any mechanism for dealing with the challenges posed by modern-day duopolies? Historically, the evolution of India's competition law has gone from the MRTP Act, 1969, which sought to control commercial practices irrespective of market power, to the Competition Act, 2002, which has removed the legal bias against big business. According to the Competition Act, there are two types of agreements:

1.     Horizontal Agreements (Section 3(3)): These are agreements between rivals in the same business. For instance: Two rival hamburger chains could come to an agreement to sell hamburgers at a fixed price. The law assumes that such deals are harmful for competition and are Appreciable Adverse Effect on Competition (AAEC).

2.     Vertical Agreements (Section 3(4)): These are agreements between businesses that operate at different levels in the supply chain. For instance: Agreements between a local restaurant and a delivery service. Here, the law looks at the deals using a "rule-of-reason," which means that the courts consider both the positive outcomes and the negative implications of such deals before making a decision.

According to Section 19(3), the rule of reason is a fact-based examination balancing pro-competitive outcomes against negative results (entry barriers and exclusion). The NRAI has been pressing for information since 2021 about the so-called ‘duopoly’ of Zomato (Eternal Ltd.) and Swiggy that it says is being used for imposing vertical restraints. This case illustrates the difference between a two-sided digital marketplace and the classical rule of reason approach that would be appropriate to a traditional physical supply chain, under strict interpretation of Section 3(4).

Critical Analysis

A. Price Parity Problem

One of the main complaints against the NRAI is the “price-parity clauses” that the platforms impose. A price parity clause is a contractual clause which requires the seller to provide a guarantee that the price quoted on a platform is the lowest price in the sales channels. Under antitrust law, there are two types of price parity:

1.     Narrow Parity: Under this rule, businesses cannot provide a lower price for their merchandise or service on their own site in comparison to what they are delivering through a delivery app. For example, if a restaurant sells a burger for ₹100 on Swiggy, a narrow parity clause prohibits this restaurant from selling a burger for ₹80 through its own website.

2.     Wide Parity (Across Platform Parity Agreements - APPAs): This is a more stringent restriction wherein the restaurants are not allowed to sell at a lower price on any competing platform or even on third-party channels. For example, if a restaurant puts up a meal on Zomato, a wide parity clause prevents it from offering that same meal with a discount on a rival app, thereby limiting any new platform’s ability to gain customers through low prices.

In Federation of Hotel & Restaurant Associations of India (FHRAI) v. MakeMyTrip India Pvt. Ltd. (MMT/OYO), The CCI provided a framework for the Indian legal system concerning parity, since it understood that broad parity removes the incentive for competing platforms to offer lower commissions because they do not lower consumer prices. This case is even more applicable for food delivery because independent restaurants rely much more on aggregators than hotels relied on OTAs, and broad parity prevents low-cost channels without names of major players from gaining customers through cheaper prices.

B. Crucial Limitations of Section 4 of Competition Act

Food delivery services function in a neutral manner by serving as a linking platform between the small food outlets and customers in need of food. However, they are affected by the bias of the “dual-role problem” as they serve not only as the operators of the marketplace but also as its competitor. What this means is that these apps are both referees and players on the field. Because food delivery apps own their culinary brands with high margins, they have an incentive to corrupt the marketplace. Such a dual role may result in the platform manipulating its search algorithm, hence leading to bias against independent restaurants and pushing customers towards its brands.

Efforts to combat the issue of platform misconduct as outlined in Section 4 (Abuse of Dominant Position) of the Competition Act have not yielded desired results. The issue became evident in July 2026 when the Competition Commission of India (CCI) dismissed the complaint lodged by R. Suresh against Zomato (Eternal Ltd.). Suresh pointed out that the pricing strategy of the platform amounted to the use of its market power and was increasing costs for customers significantly. He supported his argument with the evidence of a dish that costs ₹105 when eaten inside a restaurant, but costs an astonishing ₹198 in the application. The difference in price was explained by several factors: a ₹43 delivery charge, a ₹14.90 platform charge, and a 33% commission charged by the restaurant. In spite of the overwhelming evidence of profit extraction, the case was rejected by the CCI. The Commission stated that both platform fees and delivery charges were payments for two distinct services instead of unlawful pricing strategy.

Modern competition specialists criticize the excessively technical technique. In separating the app's functionalities like food orders, restaurant listings, and smooth banking transactions into “independent service components,” the CCI is considering services as completely distinct products at certain levels. While apps provide the same services, practically they operate as a coherent integrated system. Moreover, these platforms make significant profit margins and sell their brands through algorithm modifications rather than written contracts, which means that Section 4’s stringent definitions do not apply. Therefore, small restaurant proprietors have to struggle with big companies through the complex process of Section 3(4) vertical restraint litigation.

This situation is made even worse by the fact that in this regard Section 4 investigation applies only to a group of such entities. In accordance with the consistent jurisprudence of the CCI, the Commission does not recognize the concept of joint dominance of independent entities in the “structural parallel” situations (Delhi Vyapar Mahasangh v. Flipkart; Ashok Kumar Vallabhaneni v. Geetha SP Entertainment). However, Article 102 TFEU jurisprudence and particular cases, such as Italian Flat Glass and Nestlé/Perrier, impose joint dominance on the entities that, logically speaking, compete with each other. A particular example of this situation would be Zomato and Swiggy, which have approximately 90-95% of the market at their disposal. However, with neither entity of them being in the position of dominant entity, it raises the issue of jurisdiction—being too broad for Section 4 of the Act and at the same time too vertical for Section 3(4).

C. Data Weaponization

Food delivery aggregators capture huge quantity of hidden private data of independent restaurants: the platforms know what kind of dishes consumers look for, peak ordering time, and specific tastes in a given area. The platforms do not share insights and use the knowledge to develop the app at the same time. They also utilize the information to launch and enhance their own private label kitchen as a strategic advantage over the competitors.

As India lacks statutory jurisprudence on commercial data weaponization, it is the duty of the enforcers to look at comparative international jurisprudence. On 26 December 2022, the European Commission signed the final terms of the Decision in Case AT.40462 Amazon Marketplace. It blocked the platform from feeding its rival retail businesses with non-public information from sellers. It is imperative that India's laws incorporate this principle: non-public data asymmetries make otherwise legal private-label strategy unfair competition.

Moreover, the data weaponization reveals an important inter-legal conflict with the Digital Personal Data Protection Act (DPDPA), 2023. By aggregating granular information from end-users to "anonymized" commercial insights, aggregators operate outside of purpose limitation's consumer lenses, serving as Data Fiduciaries under Section 8(1) of the Act. The DPDPA does not structurally cover non-personal and aggregated merchant data, leaving this to the vagaries of the regulatory landscape. Platforms take advantage of this loophole in the legislation to lawfully collect hyper-local behavioral data to adjust their private labels, showing that privacy regimes are insufficient to eradicate algorithmic antitrust harms without complementing pre-existing ex-ante competition regimes.

D. The two-sidedness of the economics and the boycott of 2026 in August.

In August 2026, the fragile state of equilibrium in the market was disrupted. In July, the CCI refused to intervene in the pricing models of the platforms, leading the BBHA (Bruhat Bengaluru Hotels Association) to bring up the possible delisting of 1000+ members (restaurants) from both Zomato and Swiggy. BBHA explained its point by giving reasons like the high commission margins (8–28%), payment systems being faulty, and practices involving forcing restaurants to provide discounts impatiently. The decision of the vendors to boycott shows an extreme attempt to secure customers and vendors. Consumers may have the benefit of the convenient service provided in the form of cheap food on the apps, but aggressive appropriation of the profits of the restaurants has bad consequences in the long run.

E. Judicial Deadlock

The platforms have raised questions over the CCI's investigative process, saying the queries were made with a violation of the principles of natural justice as the confidentiality of the statements of third-party restaurant owners was not respected. The High Court stayed the proceedings of the Regulatory Board on the basis of Supreme Court's principle of evidentiary cross-examination in administrative proceedings (such as CCI v. Schott Glass India Pvt. Ltd.).

Although cross-examination guarantees procedural due process, its application to digital antitrust cases leads to “administrative lag” by traditional administrative standards. Digital platforms are network and scale-efficient, and the two to three year procedural lag allows incumbents to irrevocably change the market. By the end of the technical cross-examinations the market has irretrievably shifted for better or worse, and things are going to be done in a manner they cannot be undone.

Conclusion

The current antitrust case against India's food delivery industry highlights the shortcomings of relying on conventional “rule of reason” principles for digital platform gatekeepers. While the CCI's July 2026 decision to dismiss complaints of abuse of platforms, in R. Suresh vs. Eternal Ltd., the Bengaluru restaurants boycott in August 2026 demonstrates that the gap between the law and the market is immense. With ex-post adjudications languishing for years in court disputes over the right to cross-examine, procedural lag can allow the digital duopoly to consolidate its monopoly position. India's regulatory regime should not be merely reactive but evolve in line with structural dynamics of the digital platform economy, to safeguard competition and market access.

Recommendations

Algorithmic Audits via Cryptographic Data Trust:

Instruct the CCI to create an independent division within the CCI to execute Algorithmic Audits and demand that aggregators store the data of the merchants’ transactions in a trust based on cryptography. The platforms must also separate their marketplace algorithms from their analytics machines. CCI also requires an audit of the platforms’ search algorithm to ensure that the data from local businesses cannot be utilized to launch competing brands of private-label goods in direct violation of the DPDPA.

Dynamic Commission Ceilings Based on the Welfare of Gig-workers 

Create a progressive commission ceiling that will change depending on the verified labor contribution of a platform. The Ministry of Corporate Affairs together with the Ministry of Labour should ensure that restaurants pay a commission that does not exceed 15%. Higher levels of commissions can be achieved only if the additional revenue is saved in a special reserve to pay for the health insurance and provident fund for gig workers.