The Competition Commission of India (CCI), India’s anti-competitive watchdog, has handed hefty fines to MakeMyTrip-Goibibo (MMT-Go) and Oyo for indulging in anti-competitive and unfair business practices, according to a redacted version of a 131-page order that was uploaded on the CCI’s website.
According to the order, the combined total of the fines imposed upon Oyo and MMT-Go amount to over ₹392 crores (₹392.36 crores) – MMT-Go will have to pay ₹223.48 crores, while Oyo will have to shell out ₹168.88 crores as recompense for anti-competitive practices in hotel room listings. These penalties, according to the order, amount to 5% of their annual turnover for a period of three years.
“The Commission has imposed monetary as well as behavioral sanctions on MMT-Go (MakeMyTrip and GoIbibo) for abusing its dominant position and also for having an anticompetitive arrangement with OYO (Oravel Stays Limited). The monetary penalty is also imposed on OYO for its anti-competitive arrangement with MMT-Go vide which MMTGo delisted the competitors of OYO from its online portals in 2018,” the CCI informed in a press release on the matter.
These penalties come after the CCI conducted a thorough investigation on the matter that was on since October 2019, following a complaint from the Federation of Hotel and Restaurant Associations of India (FHRAI) and a separate complaint filed by Treebo and Fab Hotels one year later. As a result of the investigation, the CCI determined that MMT-Go held a dominant position in the “market for online intermediation services for booking of hotels in India,” and that it created an ecosystem that further cemented its dominant position in the market.
MMT-Go would use measures such as deep discounts and parity conditions in order to retain and grow its network of users and travelers, while simultaneously having an adverse impact on competition in the sector by limiting the competitive levers/instruments at the disposal of other portals. This would go on to increase the dependency of hotels on MMT-Go, and under the price parity imposed by MMT-Go in their agreements with hotel partners, the latter was not allowed to “sell their rooms on any other platform or on its own online portal at a price below the price at which it is being offered on the two entities’ platforms.”
To add to this, it was found that MMT-Go had an agreement with Oyo wherein it give preferential treatment to the hospitality chain, further leading to a denial of market access to other companies and impacting the competition in a negative manner.
The CCI has directed MMT-Go to make amends by altering agreements to remove certain exclusivity conditions such as removing the parity conditions, as well as objectively formulating the listing terms and conditions to its platform and providing access to it “on a fair, transparent, and non-discriminatory basis to the hotels/chain hotels.” It observed that “besides imposing a monetary penalty, it is imperative to ensure an environment that supports fair competition.”
It seems that both MMT-Go and Oyo plan to appeal the decision – Oyo said that it was currently “reviewing” the order in detail and believed that its “business practices and conduct comply with all applicable laws and will take all necessary steps to explain our position in the appropriate forums.”
