Online ticketing and hotel reservations company MakeMyTrip and Goibibo (MMT-GO) and hotel room aggregator OYO Rooms were fined Rs 392 crore by the Competition Commission of India (CCI) for abusing its dominant position and “anti-competitive arrangement”, the anti-trust body said on Wednesday.
“CCI has imposed monetary as well as behavioral sanctions on MMT-Go (MakeMyTrip and GoIbibo) for abusing its dominant position and also for having anti-competitive arrangement with OYO (Oravel Stays Limited). Monetary penalty is also imposed on OYO for its anti-competitive arrangement with MMT-Go vide which MMT-Go delisted the competitors of OYO from its online portals in 2018,” said the competition watchdog on Thursday.
The 131-page CCI order stipulated that MMT-GO shall pay Rs 223.48 crore and OYO Rs 168.88 crore for the alleged anti-competitive practices followed by the companies.
The order also noted that MMT-GO placed pricing restrictions on partner hotels through price parity agreements. CCI alleges that partner hotels are not allowed to sell rooms on any other Online Travel Agency (OTA) platforms at prices below those listed on the MMT-GO platform. However, MMT-Go in its own discretion can fluctuate the prices of such hotel rooms. Further, the hotel partners are mandated to observe room parity whereby they cannot refuse to provide rooms on the MMT-Go platform at any given point of time if the rooms are being provided on any other OTA, it added.
CCI in its order further alleged that MMT-Go practices predatory pricing by offering hotel rooms at less than the average room rates, an industry practice for calculating unit basis cost of rooms. Further, MMT-Go has been offering deep discounts to the customers which further led to the expansion of the OTA’s network and retention of customers. Due to such conduct, the smaller players in the OTA market are being forced to exit. It has also been alleged that MMT-Go is competing on discounts, rather than prices, and thus, their market performance is not based on efficiency, but on deep pockets.
MMT-Go and OYO have 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, the CCI order alleged.
Also, MMT-GO has been charging excessive commissions to hotel partners to the tune of 22% – 40% (from standalone hotels)—CCI alleged, dubbing the charges as ”grossly disproportionate” with respect to the commission charged by other OTAs.
CCI order further noted that MMT-Go charges a service fee from the customers at the time of booking the rooms in the name of the hotels, which is pocketed by it and never passed on to hotels; and the hotel partners, who are once registered with the MMT-Go, have no option to exit the relationship. Even when a hotel makes a request to be removed from their platform/portal, the hotel, instead of being removed from the platform, is shown as “no rooms available” or “sold out”, which severely affects the business of the hotels.
