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Synopsis

A coram of Ashok Kumar Gupta, Chairperson, Sangeeta Verma, Member and Bhagwant Singh Bishnoi, Member of the Competition Commission of India (CCI), finding MakeMyTrip and Goibibo (MMT-Go) and hotel room aggregator OYO in an anti-competitive agreement, abusing their dominant position, imposed a 392 crore penalty. Where MMT-GO is to pay Rs 223.48 crore and OYO Rs 168.88 crore.

Pursuant to the investigation by the Director General, and after considering the resultant reports, the Commission stated, "On a holistic appreciation of the facts and circumstances of the case and the mitigating factors put forth by the OPs, the Commission is of the view that the ends of justice would be met if a penalty of 5% of their respective relevant turnover is imposed on these erring parties. That brings the Commission to the determination of relevant turnover in the present matter...".

However, the coram categorically mentioned in its 131 paged order, that the Commission never intended to intervene in the 'contractual freedom' of the parties, but agreements and terms distorting fair competition in the market, necessitated it.

The coram was thus of the opinion, that the commercial arrangement between OYO and MMT-Go which led to the delisting of (denial of market access) FabHotels, Treebo and the independent hotels, which were availing the services of these franchisors was anticompetitive, within the meaning of Section 3(4)(d) read with Section 3(1) of the Competition Act, 2002.

The Commission further observed, "that the market power held by these digital platforms has accentuated due to the pandemic because of the changing landscape of customer preferences and nature of transactions, making traditional businesses increasingly dependent on a limited number of large online platforms, further contributing to the bargaining power asymmetry between large online platforms on the one hand and their users on the other".

Resultantly, CCI found MMT-Go in violation of the provisions of Section 4(2)(a)(i) as well as Section 4(2)(c) read with Section 4(1) of the Act. And the arrangement between MMT-Go and OYO was held to be in contravention of Section 3(4)(d) read with Section 3(1) of the Act.

The issue was filed under Section 19(1)(a) of the Competition Act, 2002 by the Federation of Hotel & Restaurant Associations of India (FHRAI) against MakeMyTrip, Goibibo and Oravel Stays Private Limited (OYO), where a  contravention of the provisions of Sections 3 and 4 of the Act were alleged. 

FHRAI is a representative body of the hospitality industry in India registered as a non-profit company under the provisions of Section 8 of the Companies Act.

The Commission noted,

"Fair market opportunity is the hallmark of competition. Thus, the Commission is of the view that equitable access to a dominant online intermediation on fair terms is necessary for the functioning of businesses who rely on such intermediaries to reach the end-consumers..." and "...While visibility is the function of many factors which an OTA can decide, what is important is that such factors/criteria are objectively decided, transparently communicated to the hotel/franchisees and fairly implemented. Otherwise, the competition on merits will be severely compromised by perpetrating conduct/arrangements creating in substance an unequal level playing field, under the garb/ charades of accessibility by a platform. This is neither the intent nor the object of the provisions of the Act".

Case Title: In re, Federation of Hotel & Restaurant Associations of India (FHRAI)