OYO, MakeMyTrip under scanner after industry body complains; competition watchdog orders probe

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Updated: Oct 30, 2019 11:05 AM

Competition watchdog CCI has ordered an investigation against hospitality company Oyo and online travel agency Go-MMT after industry body FHRAI filed a complaint alleging unfair business practices and destroying competition.

A significant part of the funds will be diverted towards continued growth in OYO's fastest-growing market - the United States, and in strengthening the company's position in the vacation rentals business in Europe, it added.According to FHRAI, both OYO and Go-MMT have also denied market access to two hotel chains viz Treebo and Fab Hotels.

Competition watchdog CCI has ordered an investigation against hospitality company OYO and online travel agency Go-MMT after industry body FHRAI filed a complaint alleging unfair business practices and destroying competition. The Competition Commission of India also said that there was a prima facie case for investigation against Ritesh Agarwal-founded OYO and Go-MMT, the entity made after the merger of GoIbibo and MakeMyTrip. The Federation of Hotel and Restaurant Associations of India (FHRAI) alleged that the “opposite parties have abused their respective dominant positions, they have cartelized and further, they have entered into anti-competitive agreements/agreements,” CCI note said. FHRAI has been in a tiff with OTAs for close to a year now and had also flagged its issues in previous communications to the OTAs. 

According to FHRAI, both OYO and Go-MMT have also denied market access to two hotel chains viz Treebo and Fab Hotels as the later “did not agree to pay the exorbitant commission brokerage charged,” the CCI note said. However, in the submissions given to CCI, both MMT and OYO described the FHRAI allegations as “contractual disputes” and also dissed the claim of “collective dominance” and said that this is not entailed in the Act. Since OYO deals with limited hotels and Go-MMT is an OTA which only offers listing of hotels, they cannot be alleged to “enter into horizontal agreements,” OYO, GoMMT claimed. GoMMT also denied the claim of market dominance and said that the FHRAI calculation does not take into account the sales by all travel agents including Paytm, HappyEasyGo, Thomas Cook etc. 

Meanwhile, CCI rejected FHRAI plea which said that OYO and GoMMT have been dominating the market together. FHRAI cannot allege “collective dominance” on OYO and Go-MMT’s part as the Act only envisages “unilateral abusive conduct by dominant player”, CCI observed. The CCI has forwarded the case to DG who is required to submit a detailed investigation within 150 days. 

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