Make My Trip, Goibibo (MMT-Go), and OYO were fined Rs 392 crore by the Competition Commission of India (CCI). CCI fined these companies which were spelled out in a 131-page order which is for “unfair business practices”. Make My Trip and Goibibo will pay a fine of Rs 223.48 crore while OYO will pay Rs 168.88 crore.
Key Points related to CCI
MMT-Go alleged that it imposed a price parity in its agreements with hotel partners.
These deals restrict the hotel to not sell its rooms on any other platform or its online portal at a price below the price at which it is being offered on the two entities.
Make My Trip accorded preferential treatment to OYO on its platform which caused a denial of market access to other companies.
The findings are the results of a detailed investigation into the matter that was on since 2019.
The CCI also directed MMT-GO to suitably modify its agreements with hotels/chains hotels to remove/abandon the price and room availability parity obligations imposed by it on its hotel/chain hotel partners.
The Competition Commission of India (CCI) on Wednesday (October 19) fined online hotel booking sites MakeMyTrip and Goibibo, and IPO-bound budget hotel chain OYO for a total of over Rs. 392 crore ($47 million) for anti-competitive conduct in hotel room listings.
While MakeMyTrip-Goibibo (MMT-Go) faces a fine of Rs. 223.48 crore ($27 million), OYO has been ordered to pay Rs. 168.88 crore ($20 million).
The competition watchdog had been investigating the companies since 2019, after the Federation of Hotel & Restaurant Associations of India (FHRAI) lodged a complaint that MakeMyTrip gave “special treatment” to SoftBank-backed Oyo on its platform. It had also complained that a listing agreement between the companies was creating a dominance in the online hotel booking market, and that MakeMyTrip used deep discounting methods.
FHRAI welcomed CCI’s decision, and in a statement said, “This is by far one of the biggest wins for the hospitality industry against the dominance of the aggregators. We also see this as a major verdict that will go a long way in disciplining the online travel agents (OTAs) and saving the industry.”
What did the CCI say in its order?
In a redacted order made public on Wednesday, the CCI said that MakeMyTrip and Goibibo will have to fix their “market behaviour”. Apart from the monetary penalty, it said, “MMT-Go [MakeMyTrip] is directed to suitably modify its agreements with hotels/chain hotels, to remove/abandon the price and room availability parity obligations imposed by it on its hotel/chain hotel partners with respect to other OTAs”.
This essentially means that MakeMyTrip cannot force hotels it has partnered with to offer identical or higher prices on other platforms.
“The Commission is of the view that the commercial arrangement between OYO and MMT-Go which led to the delisting of FabHotels, Treebo and the independent hotels, which were availing the services of these franchisors, was anticompetitive,” the CCI said in its order.
What next?
Oyo and MakeMyTrip are likely to appeal the CCI’s order. In a statement, OYO said, “Most Oyo customers book directly through our app, website and other channels in India. We continue to work with all OTAs as distribution partners. OYO believes that our business practices and conduct comply with all applicable laws and will take all necessary steps to explain our position in the appropriate forums.”
MakeMyTrip said it is a “pureplay marketplace” with no supply side leaning. “We are currently reviewing the (publicly available copy of the) CCI order. We anticipate that the order will have a negative impact on the level of competition and growth of the ecommerce market in India. The CCI’s order is appealable before the National Company Appellate Tribunal within 60 days. We will determine the future course of action as per advice of our legal counsels,” it added.
