On October 28, 2019, the CCI issued a prima facie order to conduct detailed investigation against online travel agents ('OTAs') – MakeMyTrip India Pvt. Ltd. ('MMT') and Ibibo Group Private Limited ('Ibibo'), and the hospitality service provider Oravel Stays Private Limited ('Oyo') (collectively, 'Opposite Parties'). 1
The Federation of Hotel & Restaurant Associations of India ('FHRAI') alleged that MMT, Ibibo and Oyo cartelized by entering into anti-competitive agreements, as well as abused their respective dominant positions. It was alleged that the Opposite Parties were charging excessive commission and providing deep discounts. MMT was alleged to have imposed price parity and room parity clauses in their agreements. Allegations of predatory pricing, as well as some miscellaneous allegations of abuse of dominance were also made.
After hearing the parties at the preliminary conference and considering the facts on record, the CCI clarified that the contentions of FHRAI regarding abuse of dominant position by the Opposite Parties collectively were liable to be rejected, since allegations of abuse by collective dominance were beyond the legal framework of Section 4 of the Act. With respect to unilateral abusive conduct the CCI was of the opinion that MMT and Ibibo were present in the 'market for online intermediation services for booking of hotels in India', and Oyo in the 'market for franchising services for budget hotels in India'. Within the market for online intermediation services for booking of hotels in India, MMT and Ibibo as a group2 was found to be dominant with 63% market share (based on its own investor presentation). With respect to Oyo, CCI relied on its previous decision in RKG Hospitality Pvt. Ltd. V. Oravel Travels Pvt. Ltd.3, and stated that Oyo was not a dominant player despite being a significant player in the market for franchising services for budget hotels in India.
The CCI assessed the agreements on record and was of the opinion that while there were parity clauses, the magnitude of anti-competitive harm could only be determined by further investigation. Additionally, the CCI ordered investigation regarding whether the commercial agreement between OYO and MMT entails preferential treatment to OYO and consequent exclusion of Treebo, Fab hotel and any other hotel chain. Further, the CCI observed that detailed investigation may also be required for allegations relating to predatory pricing, excessive commissions, misrepresentation due to delayed delisting of hotels from the website, and discriminatory levying of hotel service fees, to assess the anti-competitive effect.
1. Case No. 14 of 2019.
2. MMT had acquired 100% of Ibibo in 2017 which was notified to the CCI under Combination Registration No. C – 2016/10/451
3. Case no. 03 of 2019, Order dated July 31, 2019
Published In:Inter Alia Special Edition- Competition Law - January 2020 [ English
Date: January 17, 2020
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