Explained: Why MakeMyTrip, OYO have been slapped with a Rs 392 crore fine

MakeMyTrip, Goibibo and OYO are going to have to pay up.

This, after the Competition Commission of India (CCI) slapped a Rs 392 crore fine on the online travel firms and hospitality services provider.

Make My Trip and Goibibo (MMT-Go) have to pay a fine of Rs 223.48 crore, while OYO has to pony up Rs 168.88 crore.

The regulator in its 131-page order further directed MakeMyTrip and Goibibo  to ‘ensure fair and transparent access’ to hotels as well as to comply with a slew of directives.

The CCI this week also ordered Google to pay a massive Rs 1,337.76 penalty for abusing its dominant position in multiple markets in the Android mobile device ecosystem.

But why has the competition regulator imposed this massive fine?

Let’s take a closer look:

Why the fine?

The decision comes after the regulator found that the two platforms and OYO to have indulged in unfair business practices by way of anti-competitive agreements.

It is to be noted that MakeMyTrip (MMT) acquired Ibibo Group Holding in 2017.

MMT continues to operate its hotels and packages business through MMT India under the brand name MakeMyTrip, and Ibibo India under the brand name Goibibo.

As per Economic Times, the commission had since 2019 been investigating after allegations by the Federation of Hotel & Restaurant Associations of India (FHRAI) that MakeMyTrip gave SoftBank-backed OYO special treatment on its platform.

It was claimed that that MMT-Go imposed a ‘price parity’ in their agreements with hotel partners.

Under such pacts, the hotel partners are 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.

What else has CCI asked for?

Besides imposing penalties, the Competition Commission of India (CCI) has directed MMT-Go 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 (Online Travel Agencies)”.

Also, CCI has asked it to modify agreements to do away with certain exclusivity conditions.

“MMT-Go is directed to provide access to its platform on a fair, transparent and non-discriminatory basis to the hotels/chain hotels, by formulating the platforms’ listing terms and conditions in an objective manner,” it added.

As per Indian Express, this means MakeMyTrip cannot force hotels it has partnered with to offer identical or higher prices on other platforms.

“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 newspaper quoted the order as saying.

The Indian Express quoted the FHRAI as saying in a statement, “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 online travel agents (OTAs) and saving the industry.”

Indian Express quoted OYO as saying, “Most Oyo customers book directly through our app, website and other channels in India. We continue to work with all OTAs as distribution partners. 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.”

What next?

Oyo and MakeMyTrip are likely to appeal the order.

As the Economic Times noted_,_ Google in 2018 was fined Rs 136 crore by the regulator for search bias, but the order was set aside by the National Company Law Appellate Tribunal.

The decisions come in the run-up to the CCI setting up a dedicated Digital Markets and Data Unit (DMDU), the newspaper further reported.

“In view of the number of cases and complexity in the digital sector and the increasing need for data and technology skills, CCI is in the process of setting up a dedicated Digital Markets and Data Unit. In addition to our staff from the law, economics and finance streams, we plan to staff the unit with new professional profiles such as data scientists, algorithm experts etc,” CCI chairman Ashok Gupta said last week, as per the newspaper.

With inputs from agencies

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