Make My Trip, Go-Ibibo And Oyo Penalised For Rs. 392.36 Crores By CCI For Anti Competitive Practices

BACKGROUND FACTS

Federation of Hotel & Restaurant Associations of India ("FHRAI") had filed a case under Section 19(1)(a) of the Competition Act, 2002 against Make My Trip and Goibibo (collectively "MMT-GO") and Oravel Stays Pvt. Ltd. ("OYO"). It was alleged that there were commercial arrangement to de-list competitors of OYO, namely FabHotels and Treebo, from MMT-Go online portals.

ALLEGATIONS

FHRAI alleged that MMT-Go had imposed price parity in its agreement/contract with hotel partners. Price parity ensured that the hotel partners were not allowed to sell their rooms at any other Online Travel Agency ("OTA") or on its own online portal at a price below which it is being offered on MMT-Go's platform. However, MMT-Go in its own discretion could fluctuate the prices of such hotel rooms. Further, the hotel partners could not refuse to provide rooms on MMT-Go platform at any given point of time, if the rooms were being provided on any other OTA.

MMT-Go had indulged in predatory pricing by offering the hotel rooms at less than the "average room rate", which is the industry practice for calculating unit basis cost of rooms. The customers were being offered deep discounts by MMT-Go, which led to expansion of their network and retention of customers. Due to such conduct, the smaller players in the OTA market were being forced to exit. MMT-Go was competing on discounts rather than prices. Thus, their market performance was not based on efficiency but on deep-pockets.

Chain hotels namely Treebo and FabHotels were denied market access because of their removal from the MMT-Go platform, since they did not agree to pay the exorbitant commission brokerage charged by the latter. MMT-Go and OYO entered into confidential commercial agreements wherein MMT-Go has agreed to give preferential treatment to OYO on its platform, leading to a denial of market access to Treebo and FabHotels.

DECISION

The CCI Bench held that the commercial arrangement between OYO and MMT-Go which led to the delisting of FabHotels, Treebo and independent hotels from the platform was anti-competitive. The CCI Bench passed the following directions:

1. MMT-Go to modify its agreements with hotels to abandon the price and room availability parity obligations.
2. MMT-Go to modify its agreement with hotels to abandon the exclusivity conditions that exist inter-alia in the form of D minus clause.
3. MMT-Go to provide access to its platform on a fair, transparent and nondiscriminatory basis to the hotels/chain hotels, by formulating the platforms' listing terms and conditions in an objective manner.
4. MMT-Go will notify all its hotel/chain hotel partners, about the aforesaid modifications.
5. MMT-Go 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.

Further, CCI imposed a monetary penalty on OYO and MMT-Go amounting to 5% of their respective turnover. MMT-Go has been penalized for an amount of Rs. 223.48 Crores and OYO has been penalized for an amount of Rs. 168.88 Crores.

Case Title: Federation of Hotel & Restaurant Associations of India (FHRAI) & Anr. v MakeMyTrip India Pvt. Ltd. (MMT) & Ors.

Case No.: Case Nos. 14 of 2019 & 01 of 2020

Counsel For FHRAI: Ms. Rukhmini Bobde, Advocate Mr. Ishan Nagar, Advocate

Counsel For Ruptub Solutions Pvt. Ltd.: Mr. Abir Roy, Advocate Mr. Vivek Pandey, Advocate

Counsel For FabHotels: Mr. Karan Singh Chandhiok, Advocate Mr. Tushar Chawla, Advocate Ms. Lagna Panda, Advocate Mr. Vishnu Suresh, Advocate Mr. Vaibhav Aggarwal, FabHotels

Counsel For MakeMyTrip India Pvt. Ltd. and GoIbibo (MMT-Go): Mr. Ramji Srinivasan, Senior Advocate Ms. Megha Dugar, Advocate Mr. Shashank Gautam, External Counsel Ms. Sreemoyee Deb, Advocate Mr. Rajat Moudgil, Advocate Mr. Anand Sree, Advocate Mr. Hitesh Mehra, General Counsel (MMT-Go)

Counsel For OYO: Mr. Rajshekhar Rao, Senior Advocate Mr. Harman S Sandhu, Advocate Mr. Rohan Arora, Advocate Mr. Ravi Gangal, Advocate Mr. Rakesh Prusti, General Counsel (OYO) Ms. Urvashi Pathak, Assistant General Counsel (OYO).

Click Here To Read Order