First NRAI, Now FHRAI Takes on Swiggy, Zomato Over Private Labels and Anti-Competitive Practices

The Federation of Hotel and Restaurant Associations of India (FHRAI) is intensifying its efforts against Swiggy and Zomato, accusing the food delivery platforms of abusing their dominant market position to promote their private labels. The hospitality body plans to escalate the matter to the Ministry of Commerce and Industry, urging the government to implement e-commerce rules strictly and curb alleged anti-competitive practices.

The primary concern revolves around standalone quick commerce apps like Blinkit’s Bistro and Swiggy’s Snacc. FHRAI claims these platforms are using proprietary data from restaurant partners to unfairly compete in the same market. Pradeep Shetty, Vice President of FHRAI, confirmed plans to meet Commerce Minister Piyush Goyal next week. “Quick commerce players must operate as neutral marketplaces, and their neutrality has to be maintained. They cannot promote private labels at the expense of restaurants,” Shetty stated. FHRAI represents over 60,000 hotels and 5 lakh restaurants across India.

NRAI Considers Legal Recourse

The National Restaurant Association of India (NRAI), another influential industry body representing 5 lakh restaurants, is also exploring legal avenues. NRAI has flagged similar concerns about Swiggy and Zomato flouting anti-competitive norms and misusing restaurant data.

Sagar Daryani, President of NRAI, emphasized that aggregators should focus on supporting restaurants rather than competing with them. “We are considering filing a formal complaint with the Competition Commission of India (CCI). As long as these platforms enable restaurants to deliver efficiently, there is no issue. However, we cannot allow them to demolish the industry by promoting similar products through their private labels,” Daryani said.

Legal and Competitive Issues

Under the Competition Act, 2002, anti-competitive agreements and the abuse of a dominant position are prohibited. Section 4 specifically bans practices that deny market access or use dominance in one market to gain an unfair advantage in another. Legal experts suggest Swiggy and Zomato’s actions could violate these provisions.

“Using proprietary data from partner restaurants to benefit their private labels could constitute abuse of dominance, warranting scrutiny by the CCI,” said Sonal Alagh, Partner at Alagh & Kapoor Law Offices.

Blinkit CEO Albinder Dhindsa has denied allegations of data misuse, claiming Bistro operates independently of Zomato. “Bistro is a standalone app with a separate team. We will not use Zomato restaurant data or the Zomato app for marketing Bistro,” Dhindsa said in a statement on X (formerly Twitter).

However, FHRAI remains unconvinced. “It’s difficult to believe they won’t use restaurant data. Blinkit’s strategy of setting up cafes in high-traffic areas clearly indicates otherwise,” Shetty argued.