The National Company Law Appellate Tribunal (NCLAT) on Tuesday stayed the ₹223.48-crore penalty levied by the Competition Commission of India (CCI) on Nasdaq-listed MakeMyTrip-Goibibo (MMT-Go) for indulging in anti-competitive practices. The stay on penalty was granted subject to MMT-Go depositing 10 per cent of the penalty amount.

Mukul Rohatgi, Senior Advocate, Supreme Court and former Attorney General of India, appeared on behalf of MMT and pressed for complete stay of the entire CCI order. However, the NCLAT Bench comprising Justice Rakesh Kumar, Member (Judicial) and Ashok Kumar Mishra, Member (Technical), declined to accede to this request of stay on entire CCI order. The Bench stayed only the penalty part on deposit of 10 per cent and no stay was granted on the non monetary measures directed by the CCI.

It maybe recalled that MMT-GO had in November filed an appeal before NCLAT against CCI order of October 19 levying a penalty of ₹223.48 crore against them. CCI also 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.

In the same order, CCI had also levied a separate penalty of ₹168.88 crore on OYO, which had on November 15 filed an appeal before NCLAT against the CCI order. NCLAT had later granted OYO a stay on this penalty on deposit of 10 per cent.

Appeal before NCLAT

In its appeal, MMT-Go had pleaded that CCI order suffers from serious fundamental flaws including violation of the principles of natural justice, non-application of mind, failure to consider economic evidence on record, failure to meet the prescribed legal and jurisdictional standard necessary to find a contravention of the provisions of the Competition Act, 2002. The appeal argues that the impugned order selectively rubber-stamps the one-sided observations and conclusions of the Director General, CCI, without even adverting to the submissions made by MMT-Go in some instances, let alone discharge its statutory obligation to pass speaking orders. The appeal also contains that cross-examination proceedings were never completed by the DG.

MMT-Go, along with its appeal, has also moved an application seeking an immediate interim stay on the order of CCI stating that it is also common knowledge that the travel industry was one of the most adversely impacted industry by the Covid-19 pandemic. The travel industry is still trying to recoup from the losses suffered and the Applicants are also still reeling and trying to recoup. In such a situation, an onerous obligation to pay an ex-facie disproportionate penalty would cause an irreparable harm that would also push MMT-Go out of the market as it would be unable to compete with much bigger Indian and global players.

Complaint before CCI

The fair trade watchdog opened an investigation against MMT-Go and OYO in 2019, after Federation of Hotel & Restaurant Associations of India (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