iFood will have to limit exclusivity contracts with restaurants

iFood cannot close exclusivity contracts with brands that have 30 or more establishments. The restriction is provided for in an agreement finalized this Wednesday (8) with Cade (Administrative Council for Economic Defense) to close an ongoing administrative investigation since 2020.

New contracts should also have a limited duration of two years. After that interval, iFood must apply a kind of “quarantine of exclusivity” lasting one year, during which a new agreement of the type cannot be closed.

The representation against iFood was forwarded to the antitrust body by Rappi, the app’s main competitor in the meal delivery segment. Afterwards, other companies and entities, such as Abrasel (Brazilian Association of Restaurants), were also interested.

Tijana Jankovic, CEO of Rappi, told Sheet that the application received the agreement in a “very positive” way and that the date has become one of the most important for the company in Brazil. “We are very optimistic about what will happen now and the effect on balance and free access to the delivery market,” he said.

iFood disclosed on its news page the evaluation that Cade, with the agreement, recognizes the legality of the practice of exclusivity.

In these contracts, restaurants undertake not to make the delivery operation available on other platforms. The counterpart is to receive investments from the application and differentiated commercial conditions, according to iFood.

The deal closed this Wednesday provides for a grace period of six months for the application to implement the changes. According to iFood’s vice president of restaurants, Arnaldo Bertolaccini, in material released by the application, “the agreement has relevant impacts on iFood’s business.”

The delivery tech company says there will be cases where commercial terms will need to be renegotiated with restaurants.

According to Cade, the veto to exclusivity in the case of brands with 30 or more establishments was imposed because these networks tend to concentrate a high volume of orders. Therefore, they are considered strategic in the portfolios of food delivery applications.

The agreement to end the administrative inquiry also provides that iFood’s turnover in exclusivity contracts does not exceed 25% of the total operation throughout Brazil. In municipalities with more than 500,000 inhabitants, the number of restaurants operating exclusively on iFood cannot exceed 8% of the total.

Cade also prohibited the adoption of price parity clauses in relation to other applications and defined that the company cannot require restaurants not to participate in promotions on competing platforms or in advertising actions funded and carried out outside iFood. The agreement will run for four years.

This Wednesday, the general terms of the agreement with iFood were disclosed during a Cade meeting. The complete text of the judgment will still be published in the next two days.

Tijana, from Rappi, says that some details, such as the rules for municipalities, still need to be better understood. “The main points are all there [no acordo], but let’s find out yet. At first glance, there is nothing unsatisfactory about it.”

Since 2020, when the representation headed by Rappi was presented, the delivery intermediation market still had two other companies operating, 99 Food and Uber Eats, both linked to transport applications.

With greater control over exclusivity, Rappi’s CEO says she expects the delivery market to grow again, as the agreement with Cade would provide more security for practices.

“If you look at comparable markets, like the United States, due to regional and population differences, you usually have three or four players of national relevance, far from what we have today.”