The Competition Commission of India is looking into why the two companies failed to inform them about the deal.
- Last Updated: May 23, 2020, 6:58 PM IST
Zomato is reportedly under the Competition Commission of India (CCI) scanner for its acquisition of Uber Eats India, which may be deemed as anti-competitive. According to a report by Moneycontrol, Zomato was contacted by the CCI for information regarding its acquisition of Uber India’s food delivery business, in a deal that was valuated at about $350 million. The premise for the investigation is whether this acquisition may be qualified as anti-competitive, and sizeably reduce the number of choices that a consumer may have in this sector.
According to Moneycontrol’s sources, a Zomato spokesperson confirmed the CCI inquiry, but suggested that this was a routine inquiry. The article further states that since the acquired entity had a turnover of less than Rs 1,000 crore in India, the law did not mandate Zomato to compulsorily disclose its acquisition to CCI. Nevertheless, anti-competitive practices are regularly deemed as a critical offense, especially in times when technology companies continue to grow in power, and smaller startups continue to be acquired by bigger entities.
The food delivery space presently has Zomato and Swiggy as the two prime rivals, with numerous other players also offering bit-part solutions. However, the lucrative nature of the industry means that companies regularly come under the scanner of industry watchdogs such as CCI. Anti-competitive lawsuits are a regular feature of industries such as e-commerce, which are frequently investigated for stifling competition with heavy discounts, such as what Amazon India and Flipkart were recently investigated by CCI for.
While Zomato appears to have played down the CCI inquiry, it remains to be seen if the move is eventually deemed to be anti-competitive, or is given the green light as a legally acceptable acquisition move by one of the largest technology startups of India.