New Delhi: Competition Commission of India (CCI) Wednesday count Imposing monetary fines on MakeMyTrip, Goibibo, and OYO may only be a wrap for companies, but it also stands to make hotel booking a better and cheaper experience for travelers.
Federation of Hotel and Restaurant Association of India (FHRAI) and Casa2 Stages Pvt. Ltd. had in 2019 against the merged entity MakeMyTrip-Goibibo (MMT-Go) and Orawell Stages Pvt Ltd (OYO) alleging abuse of dominance and agreements that harmed competition. Based on the allegations, the CCI asked its Director General (DG) to investigate the matter. On Wednesday, the competition watchdog gave its verdict based on the findings of the DG.
Overall, DG found that MMT-GO was indeed the dominant player in the market for online intermediation services for booking hotels in India and it was using this dominant position to force hotels to give it preferential terms. was. In addition, DG found that a confidential deal between MMT-GO and OYO meant that other competitors were taken out of the market, leaving consumers with fewer options.
The CCI order imposed a penalty of Rs 223.48 crore and Rs 168.88 crore on MMT-Go and OYO, 5 per cent of their annual turnover, respectively. with Domestic tourism is growing strongly And set to grow even more over the next few months, such a low fine is likely to only serve as a rap on the knuckles.
The non-monetary aspects of ordering, however, stand to improve the booking experiences of consumers as it will not only give them access to more hotels, but also at lower prices.
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artificial barriers to entry
The main allegation against MMT-Go was that it had put conditions in its agreements with hotel partners that did not allow hotels to sell rooms on any other online travel aggregator (OTA) or their websites, which they were. Offering on MakeMyTrip. However, MMT-GO may “at its discretion” fluctuate the prices of hotel rooms on its Platform.
Further, the hotel partners are mandated to adhere to room parity, whereby they cannot at any time refuse to provide rooms on the MMT-GO platform, if the rooms are made available on any other OTA, the order said. are going.” It added that such allegations were not only creating artificial barriers to market entry but also excluding existing competitors.
“The competition among OTAs will reduce the commission rate for hotels,” the order said. “Further, DG observed that on one hand, MMT-GO demands price parity, on the other hand, they themselves sell rooms at lower prices and gain the loyalty of the core customers of the hotel. In the long run, such conduct This could lead to erosion of the hotel’s customer base. Rate parity was also found to have the effect of limiting the options available to customers.”
In this regard, the DG submitted that, Merger Due to the subsequent dominance of MakeMyTrip and Goibibo and the merged entity in early 2017, no new players have entered the market.
“Furthermore, the rate parity and deep discounting practices of MMT-GO are being impacted by global players such as Expedia and Booking.com, as was evident from their falling market shares,” the order said. “Additionally, such practices were not found to be leading to any improvement in the production or distribution of goods or provision of services… In view of the above, the DG observed that the rate parity and room parity clauses of section 4 (2) is in contravention of. a) (i) read with section 4(1) of the Act.”
Section 4 The Competition Act, 2002, deals with abuse of dominance by companies.
Notably, CCI has directed MMT-Go to suitably modify its agreements with hotels to do away with the various limitations introduced by it, which means that consumers can no longer search for cheaper rooms by the same hotels. If they look at other platforms.
MMT-GO and OYO Pact Anti-competitive
It was also alleged that MMT-GO and OYO had entered into a confidential settlement that resulted in the removal of OYO’s competitors from the MMT-GO platform. While the details of the agreement were modified by the CCI order, the order clarified that “neither MMT-GO nor OYO denied the existence of a commercial arrangement before the DG”.
DG found that following the deal, Oyo’s competitors—FabHotels and Treebo—were removed from MMT-GO’s platform. Delisting deprived competitors of a large enough platform where consumers could view their services, and therefore could no longer compete with Oyo. Thus, DG noted that both Fabhotel and Treebo were taken out of the budget-class hotel franchise business due to their being unlisted from the MMT-GO platform.
The CCI order stated, “Thus, the commercial arrangement/agreement between MMT-GO and OYO restricts access to the MMT-GO portals, thereby effectively making OYO’s competitors FabHotels and Treebo compete with OYO.” prevent being able to do so.” “Therefore, the said agreement resulted in a foreclosure of competition by hindering market entry.”
CCI also observed that this agreement between OYO and MMT-Go also directly impacts the consumers as it reduces their inventory choice to only OYO’s offering. Had there not been such an agreement, Fabhotel and Treebo would have been able to list their properties on MMT-GO and offer consumers a wider choice.
In addition, MMT-GO’s association with other players in the market will improve their ability to compete with OYO on an equal footing and will result in competition among these players in the market to attract more attention from consumers. There will also be improvement in quality and better pricing,” the order said.
In other words, the deal between MMT-GO and OYO meant not only did consumers have less choice of rooms, but they could also get them cheaper.
CCI directed MMT-Go to provide access to its Platform “on a fair, transparent and non-discriminatory basis” by framing the terms and conditions of its listing in an objective manner, which means that MMT-Go shall be allowed to access its Platform under OYO Have to deal with competitors such as FabHotels and . Treebo more evenly.
This will also benefit the consumers as they will now have better options for hotels and rooms.
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misrepresentation on stage
Another allegation against MMT-GO was that the platform was showing certain hotels and properties as ‘sold out’ while these properties were simply removed from MMT and rooms may have been available on other platforms.
“The Commission observed that MMT-GO is a major player in the relevant market and consumers place a great deal of trust on the results displayed on MMT-GO’s website,” the order said. “Any such misinformation on MMT-GO’s platform may affect the consumer’s viewpoint and prevent the consumer from searching for alternative channels for the same hotel, under the assumption that the hotel has sold out.”
This may result in lower room bookings in hotels and also weaken the competitiveness of budget hotels registered on various OTAs, apart from the fact that such acts of misrepresentation are exploitation of such hotels, the CCI said.
To address this behavior, CCI ordered that MMT-GO provide transparent disclosures on its platform with respect to properties that are not available on its platform, either due to termination of contractual arrangement with a hotel or chain hotel. or the quota allotted by such hotels to MMT-GO.
This means that MMT-GO will no longer have to specify rooms that are not available on its platform in advance, encouraging users to search for the same rooms on other platforms.
MMT-Go and OYO must deposit their penalty amount within 60 days from the date of receipt of the order, and MMT-Go must also submit a compliance report to the CCI within that time.
(Edited by Anumeha Saxena)
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