CCI imposes penalty of Rs. 392 crore on MakeMyTrip, Goibibo and OYO
The Competition Commission of India (CCI) has imposed penalties amounting to more than ₹392 crore on online travel firms MakeMyTrip and Goibibo for abusing its dominant position and for having anti-competitive arrangement with OYO. The regulator slapped a fine of ₹223.48 crore on Make My Trip-Goibibo (MMT-Go) and ₹168.88 crore on OYO.
It was alleged that MMT-Go imposed a price parity in their agreements with hotel partners. Under such pacts, the hotel partners are 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.
Besides the penalties, CCI has directed MMT-Go to modify its agreements with hotels and hotel chains.
The order of the CCI read, "Based on an in-depth assessment, the Commission found that the deep discounts and parity conditions, in conjunction, creates an ecosystem that reinforces MMT-Go's dominant position in the relevant market. Firstly, it helps MMT-Go to retain and further increase its network of users/travelers, who would increasingly use the platform for availing the best deals. Secondly, it impedes the competitive process between OTAs by limiting the competitive levers/instruments at the disposal of other portals who, for instance, cannot get better prices from hotels by offering lower commission rates. Thirdly, the consequent adverse effect on sale of rooms through other platforms/channels and their user bases, further accentuates the dependence of hotels on MMT-Go as well as the bargaining power imbalance that already exists between MMT-Go and its hotel partners. Fourthly, the increased sales through MMT-Go may lead to unilaterally determined higher commissions charged by it, giving it the ability to also pass on discounts which are admittedly funded through these commissions, which may adversely impact the prices at which the hotels rooms are being offered to end-consumers. The conduct of MMT-Go was thus, found to be in contravention of Section 4(2)(a)(i) read with Section 4(1) of the Act."
The Commission also found that there was an agreement/understanding between OYO and MMT-Go which was in the nature of a vertical arrangement amenable to Section 3(4)(d) read with Section 3(1) of the Act and the same had adversely affected competition in the market by denying access to an important channel of distribution through foreclosure.
The CCI directed MMT-GO 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 (Online Travel Agencies).
CCI has asked it to modify agreements to do away with certain exclusivity conditions.
"MMT-Go is directed to provide access to its platform on a fair, transparent and non-discriminatory basis to the hotels/chain hotels, by formulating the platforms' listing terms and conditions in an objective manner. MMT-Go has also been directed to provide transparent disclosures on its platform as regards the properties not available on its platform, either on account of termination of the contractual arrangement with any hotel/chain hotel or by virtue of exhaustion of quota allocated to MMT-Go by such hotel/chain hotel," it added.
It was also alleged that MMT gave preferential treatment to OYO on its platform, further leading to a denial of market access to other players.
The regulator ordered a detailed investigation into the matter in October 2019.
MakeMyTrip (MMT) acquired Ibibo Group Holding in 2017. MMT continues to operate its hotels and packages business through MMT India under the brand name MakeMyTrip, and Ibibo India under the brand name Goibibo.