Oyo Rooms, Make My Trip Under Investigation For Destroying Competition, Using Unfair Business Model
The Competition Commission of India (CCI) ordered a detailed investigation against MakeMyTrip (MMT) and OYO for allegedly indulging in anti-competitive business practices, on a complaint filed by the operator of Treebo Hotels.
Investigation Against MMT and OYO
MakeMyTrip, an online travel agency has a pact with Oyo, which provides franchising services to budget hotels. The order initiated by the CCI came on a complaint filed by Rubtub Solutions Pvt Ltd, which operates under the brand name of Treebo Hotels in India and is in the business of providing franchising services to budget hotels.
There are 3 main issues raised by the complainant, according to which:
- Treebo and its partner hotels are excluded from listing on MMT platform pursuant to the commercial arrangement between the latter and Oyo,
- price parity restrictions on the platform and
- exclusivity condition on Treebo.
MMT is alleged to have imposed “price parity restriction” on Treebo partner hotels through the chain agreement, which restricted it from providing its properties to Booking.com and Paytm at a better price.
Additionally, MMT allegedly imposed an “exclusivity condition” on Treebo through exclusivity agreement which restricted it from listing its properties on Booking.com and Paytm for 72 hours and 30 days prior to check-in for hotels situated in category A and category B cities, respectively.
In a 13-page order, the CCI said that a case against MMT and Oyo for entering into a vertical arrangement having an appreciable adverse effect on competition in the market is also “prima facie” made out.
As per Treebo Hotels, OYO has abused its dominant position in the market of franchising services for budget hotels in India by entering into an anti-competitive vertical arrangement with MMT, which is a dominant online travel agency (OTA), thereby denying market access to it.
the second time in less than six months that the fair trade watchdog has called
for an investigation against the two entities after finding prima-facie
evidence of violation of competition norms.