India’s competition watchdog has fined online hotel-booking company MakeMyTrip Group about $27 million (₹223.48 crore) and hotel chain Oyo about $20 million (₹168.88 crore) for anti-competitive behavior.
The Competition Commission of India (CCI) has been investigating the companies since 2019, after a hotel body alleged that MakeMyTrip gave biased preference to SoftBank-backed Oyo on its sites and mobile apps.
OYO and MakeMyTrip said they were reviewing the order. Both companies said they believed their business practices were fair and lawful.
Some backstory, first: In October 2015, MakeMyTrip blocked its main competitor in the budget category, Oyo, from displaying listings on its site and apps.
MakeMyTrip had boycotted Oyo to nurture its attempt at branded budget booking properties, GoStays, and because it didn’t like how Oyo was using deep discounting to woo travelers to book directly instead of via agencies.
But the record-breaking growth, fueled by record-breaking funding, appeared to prompt MakeMyTrip to change its mind about the fight.
Smaller Oyo competitor brands, such as Fab Hotels and Treebo, disappeared from MakeMyTrip’s sites and apps.
In 2019, a major hotel lobby, the Federation of Hotel and Restaurant Associations of India (FHRAI) alleged that there were deals between Oyo and MakeMyTrip that gave preferential treatment to Oyo and thus were restricting market access to rivals such as Fab Hotels and Treebo and some other independent hotel operators with franchises in these brands.
“The Commission is of the view that the commercial arrangement between OYO and MMT-Go which led to the delisting of FabHotels, Treebo and the independent hotels, which were availing the services of these franchisors, was anticompetitive,” the CCI said in its order, accusing MakeMyTrip Group of misrepresentation the information on its site as being comprehensive and fair.
It was alleged that MakeMyTrip Group charged exorbitant commission brokerage fees to be listed for smaller players while offering Oyo comparatively favorable terms.
The commission held that MakeMyTrip and its sister brand GoIbibo held 63 percent of the domestic hotel online market share in 2017, which was the last time a new entrant, HappyEasyGo, debuted in the market.
Parity provisions in contracts, combined with discounting by online travel brands, were another area that the commission critiqued.
MakeMyTrip Group has put into contracts with hotel suppliers requirements for price parity hotel partners, where hotels can’t sell their rooms at any other online travel agency or on their own direct booking channels at rates below MakeMyTrip Group’s. Yet the online travel company retains its right to flex rates up and down to drive demand, such as offering rates below the average room rate.
It is likely MakeMyTrip Group and Oyo will appeal the regulator’s decisions.
Among their many complaints, the companies said in recent statements the investigation is devoid of any useful economic analysis and several concepts have been wrongly applied. MakeMyTrip Group also said it cannot be considered dominant in the online booking market when one looks at the bigger picture.
Skift India Daily
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Tags: competition, india, makemytrip, news blog, oyo