OYO’s Interim application for immediate stay of CCI’s ₹ 169 crore penalty order also likely to be taken up by NCLAT on Tuesday.

The National Company Law Appellate Tribunal (NCLAT) has agreed to hear on Tuesday the IPO-bound OYO’s plea against the CCI order imposing ₹169 crore penalty on it for indulging in anti-competitive practices.

This was agreed upon after a special “mentioning” made by Amarchand & Mangaldas, who is the counsel for OYO, before the Chairperson Court comprising NCLAT Chairperson Justice Ashok Bhushan, Technical Members Alok Srivastava and Barun Mitra, sources close to the development said. 

Besides OYO’s appeal (to be considered for admission), the hospitality and travel tech firm’s interim application for immediate stay on the CCI penalty order is also likely to be taken up on Tuesday, it is learnt.

Though OYO had sixty days to appeal CCI’s penalty order of October 19, it has rushed to NCLAT in view of its impending IPO, which is sought to be restrained by hospitality industry body  Federation of Hotel & Restaurant Associations of India (FHRAI) by making representation to SEBI citing the imposition of penalty by CCI.

It maybe recalled that IPO-bound Oravel Stays Ltd (OYO) had on November 15 filed an appeal before NCLAT against CCI order of October 19 levying a penalty of ₹168.88 crore on the hospitality and travel-tech firm for indulging in anti-competitive practices. 

Appeal before NCLAT

In its appeal before NCLAT, OYO has contended that apart from MMT-Go, there are strong and well-backed online travel agencies such as Yatra.com, Booking.com, Expedia & Cleartrip besides direct websites and apps of hotel owners, offline channels which offer competitive options to FabHotels and Treebo – the other two Informants in the case before CCI. 

It also contended that MMT-Go is not a significant channel of booking for OYO as out of its total revenue in 2020, the revenue generated from bookings on MMT-Go was minimal. Thus, it was contended that any arrangement between OYO and MMT-Go cannot be said to have the effect of foreclosing any competitor from distribution of hotel rooms to customers. The appeal also argued that the penalty imposed by CCI was in complete derogation of directions of Supreme Court which has specifically held that a penalty must be proportionate to the alleged violation and limited to the relevant turnover and as such only the turnover/ profit attributable to the sales of the relevant product of OYO should have been considered, and not the total turnover. 

CCI had on October 19 imposed a separate penalty of ₹223.48 crore on MakeMyTrip-Goibibo(MMT-Go).  This was besides the penalty of ₹ 168.88 crore imposed on OYO.

Among other things, the allegation was that MMT and OYO had entered into confidential commercial agreements wherein former has agreed to give preferential treatment to OYO on its platform, thereby foreclosing competitors from distribution of hotel rooms to consumers.

CCI had also in its order directed MMT-Go to change its market behaviour and, in particular, modify its agreements with hotels so as to remove the price and room availability parity obligations imposed by it on its hotel partners with respect to other Online Travel Agencies.

Complaint before CCI

The fair trade watchdog opened an investigation against MMT-Go and OYO in 2019, after FHRAI lodged a complaint with it alleging that MMT-Go imposed a price parity in their agreement with hotel partners whereby the hotel partners are not allowed to sell their rooms at any other platform or on its own online portal at a price below the price at which it is being offered on MMT-Go’s platform. 

Also, the hotel partners are mandated to observe room parity whereby they cannot refuse to provide rooms on MMT-Go at any given point of time if the rooms are being provided on any other platform. Further, it was alleged that MMT and OYO entered into confidential commercial agreements wherein MMT has agreed to give preferential treatment to OYO on its platform.

Related Topics
comment COMMENT NOW