CCI fines Oyo, MakeMyTrip for anticompetitive conduct

The Competition Commission of India on Wednesday ordered MakeMyTrip and Oyo to pay hundreds of crores in fines for anti-competitive conduct in hotel room listings. The commission uploaded a redacted version of the order on its website. Both firms were fined 5% of their annual turnover for a period of three years; MMT was fined Rs 223.48 crore, while Oyo was fined Rs 168.88 crore.

Budget hotel chains had complained to the CCI that the companies’ vertical integration agreement was creating a dominance in the online hotel booking market, and that MakeMyTrip used deep discounting and enforced terms that prevented rooms from being cheaper on other platforms.

An Oyo statement indicated that the platform would appeal the ruling: “Most OYO customers book directly through our app, website and other channels in India. We continue to work with all [online travel agents] as distribution partners,” a spokesperson told Entrackr. “OYO believes that our business practices and conduct comply with all applicable laws and will take all necessary steps to explain our position in the appropriate forums.”

A MakeMyTrip spokesperson also indicated that the company would explore an appeal, saying the platform was compliant with Indian laws. “We are a pureplay marketplace with no supply side leaning,” the company said in a statement. 

“Infact, more than 35,000 SME hotel partners are associated with us. We are currently reviewing the (publicly available copy of the) CCI order.  We anticipate that the order will have a negative impact on the level of competition and growth of the ecommerce market in India. The CCI’s order is appealable before the National Company Appellate Tribunal within 60 days. We will determine the future course of action as per advice of our legal counsels.”

The Federation of Hotel & Restaurant Associations of India (FHRAI) welcomed the order. In a statement by its president Pradeep Shetty, the union, which made the complaint that led to CCI’s investigation, 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.”

“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,” Shetty added. “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.”

In addition to paying penalties, “MMT-Go [MakeMyTrip] is directed to suitably modify its agreements with hotels/chain hotels, to remove/abandon the price and room availability parity obligations imposed by it on its hotel/chain hotel partners with respect to other OTAs,” the order said. This essentially means that MakeMyTrip cannot force hotels it has partnered with to offer identical or higher prices on other platforms.

The commission also ordered that hotel listings be offered on a transparent basis on the platform.

While the order will definitely be appealed by both firms, they should perhaps consider a defense based on their shrinking market shares in the segment. Anecdotal evidence indicates a strong push by many of their 'partner' hotels to resist such tactics, going as far as not accepting bookings made on these platforms. Complaints from travellers are rife on social media , and it does seem like the market will self correct in time.

Update (10:46 pm): Added statement by FRHAI.