The Competition Commission on Wednesday slapped penalties totalling more than Rs 392 crore on online travel firms MakeMyTrip, Goibibo and hospitality services provider OYO for unfair business practices.
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MakeMyTrip and Goibibo (MMT-Go) have been asked by the regulator to ensure fair and transparent access to hotels as well as to comply with various directions.
The 131-page order comes after the Competition Commission of India (CCI) found the two platforms and OYO to have indulged in unfair business practices by way of anti-competitive agreements.
A fine of Rs 223.48 crore has been slapped on Make My Trip-Goibibo (MMT-Go) and Rs 168.88 crore on OYO. It is also the highest cumulative penalty imposed by CCI on entities in the digital space.
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Besides imposing penalties, the Competition Commission of India (CCI) has 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)”.
In the case of MMT and Goibibo, the total penalty of Rs 223.48 crore translates to 5 per cent of the average three-year annual turnover of the two entities.
The total penalty of Rs 168.88 crore on OYO is equivalent to 5 per cent of the average three-year relevant turnover, which includes turnovers of Oravel Stays Ltd and OHHPL (Oyo Hotels and Homes Pvt Ltd).
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While noting that it is conscious of the contractual freedom of the parties, CCI said that if such freedom leads to anti-competitive outcomes, then it is statutorily duty-bound to intervene.
“The denial of access in the present case, as an admitted position, has emanated from an exclusionary and mutually beneficial agreement between MMT-Go and OYO and not from any non-compliance of contractual commitments on part of
FabHotels and Treebo,” the regulator said.
The regulator ordered a detailed investigation into the matter in October 2019 following a complaint by the Federation of Hotel & Restaurant Associations of India (FHRAI). Later, complaints from FabHotels and Treebo were clubbed.
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In a raft of directions on Wednesday, the fair trade regulator has asked 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).
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Further, they have been directed to modify its agreement with hotels/chain hotels, to do away with certain exclusivity conditions.
MMT-Go should 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. Also, they should notify all its hotel/chain hotel partners, about the modifications, as per the order.
The watchdog also said that MMT-Go should 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.
MMT-Go, both of which are part of the same group, has also been directed to submit a compliance report, on an affidavit, with regard to the directions, within 60 days of receiving the order.
Among others, 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.
In the order, watchdog noted that the commercial arrangement between OYO and MMT-Go which led to the delisting of FabHotels, Treebo and the independent hotels, which were availing the services of these franchisors was anti-competitive.
FabHotels and Treebo were relisted later.
“While the Commission is not inclined to intervene with the contractual freedom of the parties to decide their commercial terms of dealing, suffice to reiterate that such terms shall not be employed as tools to distort fair competition in the market.
“MMT-Go, as a dominant channel of distribution, shall endeavor to provide fair and non-discriminatory access of its platform to users,” the watchdog said.
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.
