On August 20, 2019, CCI approved the acquisition of additional 42.52% outstanding voting securities of MakeMyTrip Limited ('MMT') from MIH Internet Sea Private Limited ('MIH') by Ctrip.com International Limited ('Ctrip').1 As purchase consideration, Ctrip proposes to issue approximately 5.6% of Ctrip's outstanding ordinary shares to MIH. Subsequently, Ctrip will transfer 4% of outstanding voting securities of MMT to Golden Trip Investment Fund, L.P ('GTIF'). Ctrip, MMT, and GTIF are together referred as 'Parties'.
i. Horizontal Overlaps: CCI observed that Ctrip and MMT are engaged in 'travel, accommodation, and travel related services' in India. Within this sector, Ctrip and MMT exhibit horizontal overlaps in (a) air ticket bookings, (b) accommodation bookings, (c) package holidays, (d) car rentals, (e) B2B services and (f) other services, ('Horizontal Markets').
ii. Vertical Overlaps: CCI observed that the transaction would also give rise to vertical relationships in the following activities of the Parties: (a) supply of 'international air ticket inventory' (upstream) by Ctrip to Ibibo (part of MMT Group) for 'travel market in India' or 'air ticket booking sub-segment in India' (downstream) ('Ticketing Overlap'); (b) supply of 'domestic accommodation' (upstream) by MMT Group to Ctrip for 'travel market in India' or 'accommodation booking sub-segment in India' (downstream). ('Accommodation Overlap'); (c) supply of 'meta search service ('MSS')' (upstream) by Ctrip (through its subsidiary Skyscanner) which directs end consumers to MMT's websites for booking travel and travel related services in India (downstream) ('MSS Overlap') (together, 'Vertical Links').
Assessment by CCI
i. Relevant Market: Rejecting the parties' submission that the 'travel and travel related services' market should include all travel services (accommodation, transportation, attractions), travel channels (direct suppliers, travel agents, online travel aggregators ('OTAs'), and corporate travel providers, etc.), and all channels of distribution (online and offline), CCI decided to assess the narrower segments of the relevant market of 'travel, accommodation, and other travel services' involving (i) specific distribution channels, (ii) specific travel services, and (iii) specific travel channels. CCI observed that the online channel appears to be a distinct mode of distribution which cannot be substituted by other offline modes or direct sale. CCI noted that travel services are not substitutable, but complementary since a consumer may search for these services at different points of time and may not even require a purchase of all these services. Further, CCI observed that travel channels / players engaged in this sector (direct suppliers, OTAs, travel agents, etc.) operate in different relevant markets because while OTAs are intermediaries between direct suppliers and customers, the direct suppliers (such as airline operators) sell their services to the customers directly.
ii. Competition Assessment: In its assessment of the Horizontal Markets, CCI observed that the increment in the broad segment of 'travel and travel related services' (online and offline), as well as in the narrow segments of the relevant market (online travel and travel related services), would be between 0-5%.
While assessing the Vertical Links:
(a) Ticketing Overlap: CCI noted that the Gross Merchandise Value ('GMV') of the total international tickers suppled by Ctrip to Ibibo was a negligible fraction of the total tickets booked on MMT Group's platforms, and total international flight tickets sold by Ctrip relating to India.
(b) Accommodation Overlap: CCI noted that the total value of the domestic hotel bookings supplied by the MMT Group to Ctrip was a negligible fraction of the total GMV of the domestic hotel bookings sold by MMT Group. Also, there were no exclusivity arrangements between the Parties.
(c) MSS Overlap: CCI noted that (A) MSS is only an ancillary service and is not an essential input for players in the downstream market; (B) Skyscanner has no commercial incentive to foreclose the input (MSS) since comparing a wide range of options allows Skyscanner to remain competitive; (C) GMV of air bookings on MMT Group's platforms through Skyscanner was negligible; and (D) the arrangement between the Parties is on a non-exclusive basis.
On the basis of this analysis, CCI found that the transaction is unlikely to cause any AAEC in India.
1 Combination Registration No. C-2019/05/664.
Originally published - January 2020
Date : January 17, 2020
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