The Competition Commission of India (CCI) has taken strict action against online travel firms MakeMyTrip (MMT), Goibibo and hospitality services provider OYO and levied penalties worth Rs 392 crore on them. The trio came under the scanner of the regulatory watchdog for their alleged business practices.
In a 131-page order, CCI stated that these firms indulged in “unfair business practices”, which was the reason these penalties were imposed on them. As per the order, MakeMyTrip and Goibibo (MMT-Go) have been fined with Rs 223.48 crore while OYO will have to pay Rs 168.88 crore.
The regulatory body stated that MMT-Go “imposed a price parity in their agreements with hotel partners.” Under such deals, the partner hotels were 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.”
Pradeep Shetty, executive committee member of Federation of Hotel & Restaurant Associations of India (FHRAI) and president of Hotel and Restaurant Association of Western India (HRAWI) said, “This is by far one of the biggest wins for the hospitality industry against the dominance of the aggregators. We also see this as a major verdict that will go a long way in disciplining the OTAs and saving the Industry. The actions of Go-MMT and OYO have individually as well as collectively caused immense damage to hotels across all segments. These entities indulge in deep discounting, unfair business practices, dominant positioning and unilateral agreements, among other unethical business practices.”
According to reports, MMT reportedly accorded preferential treatment to OYO on its platform, leading to denial of market access to other companies.
“OYO especially is responsible for the systemic depredation of the budget segment hotel business and its market as a means to achieve a notional billion-dollar valuation. This is a serious cause of concern for the hospitality ecosystem of our country. We hope that this will also serve as an eye opener for investors and the regulatory bodies about Oyo which is proposed to go public,” Shetty added.
All these findings and the resulting fines were a result of a detailed investigation that was reportedly on since October, 2019.
Besides these monetary penalties, CCI has also asked MMT-Go to modify their agreements with hotels and remove the price and room availability parity obligations imposed on their hotel partners. This is to offer a level playing field for other online travel agencies (OTAs). Further, it has also been asked to revise agreements to do away with certain exclusivity conditions.