News

February 25, 2020

CCI’s Makemytrip-Oyo inquiry joined by Treebo


[ by Kavita Krishnan ]

MakeMyTrip

Budget hotel chain provider Treebo filed a complaint against online travel agencies MakeMyTrip and hotel chain Oyo with the Competition Commission of India for abuse of dominant position in online hotel booking in India for predatory pricing and high commissions. The contractual relationship of MakeMyTrip and Oyo is already being investigated by the CCI.

The CCI had been investigating MakeMyTrip since October 2019 based on a complaint filed by Federation of Hotel and Restaurant Associations of India (FHRAI). Treebo has alleged that Makemytrip is dominant player in its market with 63% share and its “vertical integration” with Oyo. According to the complaint, MakeMyTrip and OYO control 89% of the budget and franchised hotels space thereby creating ‘significant barriers of entry given the network effects’.

Allegedly, back in 2017, issue arose between the companies when Makemytrip was to involve Treebo for an investment listing Treebo’s hotels exclusively on the OTA (Online Travel Agency). As a part of the negotiations, top Makemytrip executives threatened that Treebo will be removed from the platform. The talks then fell through and Treebo was delisted from Makemytrip in March 2017, but decided to list back in six months by entering an “exclusivity agreement” as “incurred excessive losses”.

It was further alleged that after relisting on Makemytrip, Treebo faced restrictions on listing properties on platforms like Paytm and Booking.com at a lower price as a part of the “exclusivity arrangement”. Another issue is that Treebo was not allowed to list properties on Paytm and Booking.com for three days before check-in in 29 cities, including Bengaluru and Mumbai, and for 30 days in another 25 cities, including Delhi and Goa. According to Treebo it had no option but to accept the conditions in the exclusivity arrangement.

Other players in the budget hotel space have also joined the CCI investigation as potential witnesses. The commission by an order earlier notified that there was evidence that Fab Hotels had a substantial interest in the outcome of the proceedings and that it is necessary to allow it to present its opinion in this matter for a meaningful investigation. Fab Hotels ($50 million in total funding) and Treebo ($57 million in total funding) were Oyo’s competitors. Oyo is backed by Japanese investment giant Softbank and has raised over $3 billion in funding.



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