Indian food delivery platform Zomato has removed a controversial contractual clause, which allowed it to penalise restaurants for offering reduced prices to walk-in customers, according to Reuters, citing a company source.

The move follows resistance from restaurant operators, who argued that the provision interfered with their ability to decide pricing across different channels.

For several years, Zomato’s standard agreement with partner outlets contained a “charges for price disparity” clause.

This term enabled the platform to levy a penalty if in-restaurant or in-house delivery prices were found to be below the prices displayed on the Zomato app.

The contracts stated that the company could impose a charge equal to “three times the differential amount” for each such order.

The National Restaurant Association of India (NRAI), an organisation that represents restaurants in the country, opposed the clause, saying it restricted pricing flexibility.

NRAI president Sagar Daryani was quoted by Reuters as saying: “It’s our product and should be our pricing. We appreciate their assurance that price parity will no longer be enforced.”

Contract documents reviewed by the news agency showed that Zomato reserved the right to use tools such as mystery shopping – covert visits by representatives to keep a check on the restaurants.

The company source told Reuters that the dropped clause was never enforced.

Last year, Zomato officially rebranded as Eternal following shareholder approval, as it aimed to broaden its business scope beyond food delivery.