Brazil's antitrust regulator, CADE, has launched an administrative inquiry into the food delivery platform 99Food. The investigation stems from a complaint filed by rival Keeta, alleging abuse of a dominant market position. At the heart of the dispute are accusations of restrictive contractual clauses designed to stifle competition.
Allegations of Market Foreclosure
The primary accusation involves "banishment clauses" that allegedly prevent partner restaurants from working with competitors Keeta and Rappi. Keeta claims 99Food offers substantial financial incentives, reportedly reaching six-figure sums, to secure these exclusive arrangements. This strategy is viewed as a deliberate effort to foreclose the market and hinder the entry of new players.
These agreements are reportedly reinforced by severe contractual penalties for any restaurant that violates the exclusivity terms. According to the complaint, these fines can amount to double the value of the initial financial incentive provided by 99Food. Such measures are designed to ensure strict adherence and limit the operational freedom of restaurant partners.
Price Parity and Industry Concerns
A second practice under scrutiny involves price parity clauses that link restaurant pricing to rival platform iFood. These terms allegedly compel restaurants on the 99Food platform to offer prices equal to or lower than those on iFood. This raises further concerns about the manipulation of market prices and limiting consumer choice across different services.
The investigation has drawn support from other key industry stakeholders, including competitor Rappi and the Brazilian Association of Bars and Restaurants (ABRASEL). ABRASEL has formally joined the case as an interested party, emphasizing the direct impact on its members' freedom of contract. This broad involvement signals significant industry-wide concern over the alleged practices and their potential market impact.
The Company's Defense
In its defense, 99Food has characterized its strategies as pro-competitive and standard business practice. The company argues that the exclusivity agreements are temporary and are balanced with tangible benefits for its partners. These incentives include lower commission fees for restaurants and increased earning opportunities for delivery couriers.
Regulatory Precedent and Next Steps
This case is reminiscent of a previous CADE investigation into market leader iFood, which also involved exclusivity contracts. That inquiry concluded with a settlement that placed limits on iFood's ability to sign exclusive deals with large restaurant chains. The current investigation suggests the regulator is maintaining its focus on ensuring fair competition within the sector.
With the formal inquiry now open, CADE's superintendence will proceed with a detailed analysis of 99Food's contracts. The regulator will gather evidence to assess the scope and competitive impact of the contested clauses. However, CADE has deferred a decision on suspending the clauses, opting to await the outcome of a parallel court case.
The inquiry into 99Food underscores the intense competitive dynamics shaping Brazil's food delivery market. CADE's intervention highlights the regulator's commitment to policing anticompetitive behavior and maintaining a level playing field. The outcome of this investigation could have significant implications for contractual practices and competition across the entire industry.