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Competition Commission of India (CCI) has ordered an investigation against online travel platform MakeMyTrip (MMT)-GoIbibo and OYO for abuse of dominant position after it received a complaint from the Federation of Hotel and Restaurant Associations of India (FHRAI).
Last December, FHRAI had sent separate letters to MMT and GoIbibo, highlighting the grievances of their members against the alleged malpractices of MMT, including predatory pricing, charging of exorbitant commissions from hotels, registering and providing illegal and unlicensed bed and breakfast on its platform, and misrepresentation.
The hotel industry body added that the merger of MMT and GoIbibo has led to its dominance in the relevant market of online travel agency, which has empowered MMT-Go to operate independent of the competitive forces prevailing in the relevant market.
“It has been alleged that MMT-Go has imposed a term in the contract with hotels, whereby the latter is not allowed to sell its room at any other platform or on its own online portal at a price below which it is being offered on MMT-Go’s platforms,” the CCI order stated, adding that “ prima facie ” MMT-Go appears to be dominant in the relevant market. FHRAI submitted that OYO facilitates and markets budget accommodation on its platform.
Dominant position
It has about 18,752 hotels registered on its platform across all major cities in India and its market share for supply of rooms priced below ₹2,000 is 28 per cent and for those below ₹1,000 is 67 per cent, which shows that it has gained a competitive advantage and secured a position of dominance in the relevant market, the hotel industry body alleged.
The commission rates levied by MMT and OYO on the hotels are similar, which ranges between 40 and 45 per cent. According to FHRAI’s submission, these platforms are stated to be giving discounts simultaneously, which shows “some meeting of minds between them with respect to charging exorbitant commission and providing deep discounts.”
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