Anti-trust regulator Competition Commission of India (CCI) has dismissed complaints by Federation of Hotel & Restaurant Associations of India (FHRAI) that Oyo Hotels and Homes was misusing its dominance, siding with the company’s contention that it was a hotel chain and not an online travel agency (OTA)
Anti-trust regulator Competition Commission of India (CCI) has launched an investigation into whether travel booking platform MakeMyTrip has abused its alleged position of dominance and ruled that hospitality chain Oyo Hotels and Homes is not a dominant player.
As "MMT is prima facie found to be dominant, this conduct of MMT merits investigation. A prima facie case for investigation under Section 4 of the Act is made out against MMT-Go, as elucidated in the earlier parts of this order," says the CCI order that CNBC-TV18 reviewed.
Section 4 of the Competition Act pertains to abuse of dominance and is a serious offence under India's anti-trust laws.
In the same order, CCI dismissed complaints by Federation of Hotel & Restaurant Associations of India (FHRAI) that Oyo was misusing its dominance, siding with the company’s contention that it was a hotel chain and not an online travel agency (OTA.)
CCI ruled that Oyo, one of the world's largest hotel chains, is not in a dominant position and does not engage in price parity, predatory pricing, charging of commissions, misrepresentation of information and hotel service fee levies, a statement by the company said. CCI also observed that Oyo is not charging exorbitant commissions from hotels that are a part of its chain.
But CCI has ruled that there exists a prima facie case for investigation against Oyo and MakeMyTrip-GoIbibo (MMT-Go) for alleged violations of Sec 3(4) of Competition Act.
Section 3 of The Competition ACT pertains to whether parties have entered into a pact that causes or is likely to cause an appreciable adverse effect on competition within India.
CCI received complaints that the tie-up between MMT-Go and Oyo led to the exclusion of Treebo and Fab Hotels. There is a potential Competition Act violation if the agreement prevented these competitors of Oyo to be listed on MMT. The alleged preferential treatment to Oyo and consequent exclusion of Treebo and Fab Hotels merited an investigation, the CCI ruled.
An increasing number of Indian and American hotel operators who have partnered with OYO are complaining about being blindsided by fee increases.
CCI, said the Oyo statement, has acknowledged that the company and MMT-Go operate in different segments and as a budget hotel chain, it is in a vertical relationship with MMT, which is essentially a distribution platform for hotels. The concern expressed is around whether Oyo’s contractual relationship with MMT, as part of an arrangement, may have an adverse effect on competition, according to the statement.
MMT acquired rival ibibo in 2016, in what was then billed as the biggest purchase in India's online travel space.