Zomato has removed a controversial pricing clause from its restaurant partner agreements following sustained pushback from the industry, marking a notable shift in how food delivery platforms balance control with partner autonomy.
The clause, often referred to as a price parity provision, had required restaurants to maintain prices on the platform that were equal to or lower than those offered through their own channels, including dine-in or direct orders. According to sources, the provision also allowed the platform to impose penalties if discrepancies were detected.
Under the earlier agreement, restaurants risked fines of up to three times the price difference per order if they were found offering lower prices outside the platform. Enforcement mechanisms reportedly included monitoring tools such as customer complaints and “mystery shopping” checks.
While the clause was not actively enforced, its presence raised concerns across the restaurant ecosystem. Industry bodies argued that it limited operators’ ability to independently manage pricing strategies, especially as businesses navigated rising costs and fluctuating demand.
The removal follows objections from restaurant groups, including the National Restaurant Association of India, which had flagged the clause as restrictive and potentially anti-competitive.
Legal experts also pointed to possible competition law concerns, drawing parallels with earlier rulings in adjacent sectors where similar parity clauses were challenged. In India, regulators have previously taken action against comparable practices in online travel platforms, increasing scrutiny around such provisions in digital marketplaces.
The decision appears to be a preemptive move amid growing attention on competition practices within the country’s rapidly expanding food delivery market.
Zomato’s policy shift highlights a broader recalibration in the relationship between platforms and restaurant partners.
Food delivery aggregators have historically exercised significant influence over pricing, visibility, and customer access. However, as the sector matures, restaurants are increasingly pushing back, seeking greater control over margins, branding, and customer relationships.
The removal of the clause signals a recognition that long-term platform growth may depend on maintaining a more balanced partnership model.
For restaurants, the change restores greater flexibility in pricing decisions, allowing them to differentiate between on-platform and off-platform channels without contractual constraints.
For platforms, the move reflects a more cautious approach to governance as regulatory scrutiny intensifies. It also underscores the importance of maintaining trust within a network of thousands of restaurant partners.
The development comes as India’s food services market is projected to grow significantly in the coming years, with estimates suggesting expansion from $94 billion to $153 billion by 2031.
