The Competition Commission of Pakistan (CCP) has initiated an inquiry against the online food delivery service platform/aggregator, Foodpanda, to investigate its alleged abuse of dominant position and a possible violation of Sections 3 (Abuse of Dominant Position) and Section 4 (Prohibited Agreement) of the Competition Act, 2010, in the market of online food delivery platforms.
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The enquiry committee will also review and place before the Commission its findings, whether the exemption granted (for loyalty Agreements) to Foodpanda in April 2019 for three years is impeding competition in any manner in light of the concerns highlighted by various market players.
The CCP has initiated the enquiry under Section 37 of the Act on the formal complaints filed by Foodpanda’s competitor, M/s Cheetay Logistics Pakistan Limited, on May 4, 2021, and the All Pakistan Restaurant Association (APRA) on June 10, 2021.
Formerly, a complaint was also filed by another online food aggregator, Careem Networks Pakistan (Private) Limited, pertaining to the exemption granted to the same aggregator in 2019.
Upon receiving the said complaints, the CCP’s Cartel and Trade Abuse Department conducted a preliminary fact-finding exercise and found that Foodpanda seems to have a dominant position in the market of online food delivery platforms with a considerable amount of admitted volume of 100,000 per day food orders from different restaurants/outlets/food chains across Pakistan.
Regarding the alleged abuse of the dominant position, the concerns inter alia include; charging exorbitant commissions, offering fidelity rebates, discriminatory practices, setting out various discounts to exploit participants, and entering into exclusivity with parties through loyalty agreements.
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These concerns stretch the scope of abuse to be a barrier for the new entrants in online food delivery platforms. The enquiry committee has already been working on the case, consulting all the concerned parties, and seeking relevant information for deliberating the matter objectively.
Findings of the enquiry upon conclusion will be placed before the Commission for its decision. CCP is mandated under the Competition Act to ensure free competition in all spheres of commercial and economic activity, enhance economic efficiency, and protect consumers from anti-competitive behavior, including abuse of dominant position and prohibition of any such agreements that may distress the competition.
