Competition act: Regulator orders probe against MakeMyTrip-Ibibo and OYO

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October 30, 2019 12:57 AM

The allegation also states that MMT and OYO have entered into confidential commercial agreements wherein MMT has agreed to give preferential treatment to OYO on its platform, further leading to a denial of market access to Treebo and Fab Hotels.

The CCI said that there is a prima facie case for investigation against MMT-Go and OYO for alleged violation of the provisions of Section 3(4) of the Act, which deals with anti-competitive agreements. The CCI said that there is a prima facie case for investigation against MMT-Go and OYO for alleged violation of the provisions of Section 3(4) of the Act, which deals with anti-competitive agreements.

The Competition Commission of India (CCI) has stated in an order dated October 28 that there is a prima facie case for investigation against MakeMyTrip India-Ibibo Group (MMT-Go) and Oravel Stays (OYO) for alleged violations of the Competition Act. The order is in response to a complaint filed by the Federation of Hotel & Restaurant Associations of India (FHRAI).

The CCI said that there is a prima facie case for investigation against MMT-Go and OYO for alleged violation of the provisions of Section 3(4) of the Act, which deals with anti-competitive agreements. A prima facie case for investigation under Section 4 of the Act, which deals with abuse of dominant position, has also been made out against MMT-Go. The CCI has sought a report on the investigation within 150 days.

FHRAI has alleged hospitality players Treebo and Fab Hotels have been denied market access and have been allegedly remov-ed from the platform of MMT-Go as they did not agree to pay the exorbitant commission brokerage charged by the latter.

The allegation also states that MMT and OYO have entered into confidential commercial agreements wherein MMT has agreed to give preferential treatment to OYO on its platform, further leading to a denial of market access to Treebo and Fab Hotels.

The CCI stated in its order that from the search results presented by MMT on random queries for hotels across different locations, it appears that Fab Hotel and Treebo are indeed not present on this platform, while they earlier used to be. “If this is a consequence of an agreement between OYO and MMT, which is also reported by media, to not list the closest competitors of OYO on the platform, it may potentially contravene the provisions of Section 3(4) of the Act,” the order said.

The Competition Commission observed that both OYO and MMT have considerable presence in their respective market segments and any restrictive agreement which may lead to refusal to deal with some players or exclusive arrangement with some players, may potentially have adverse effect on competition.

An OYO spokesperson said that the firm will continue to cooperate with CCI’s investigation process as they review the complete order. “We will actively engage with the Hon’ble Commission in this process. We are also thankful for the Hon’ble CCI’s recognition of the fact that OYO is a hotel chain and for dismissing certain prima facie allegations regarding price parity, predatory pricing, exorbitant commissions, etc. Given that the matter is sub-judice, we have nothing more to share at the moment,’’ the spokesperson said.

FHRAI had also alleged that MMT charges a service fee from the customers at the time of booking the rooms in the name of the hotels, which is pocketed by MMT and never passed on to hotels. Further, such service fee is discriminatory as it is levied on certain hotels, it was alleged.

CCI observed that since MMT is prima facie found to be a dominant player, this conduct of MMT merits investigation. MMT said in a statement that it would co-operate with CCI and demonstrate that the allegations are unfounded.

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