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Wednesday, 30 October, 2019, 11 : 15 AM [IST]

CCI orders detailed investigation into FHRAI charges against MMT-Go & OYO

Finding merit in the petition filed by Federation of Hotel & Restaurant Associations of India (FHRAI) against the abuse of market dominant position by MakeMyTrip-GoIbibo (MMT-GO) and OYO (Oravel Stays Pvt. Ltd.) in the Online Intermediation Services for hotels and Franchising Services for budget hotels in India, respectively, the Competition Commission of India (CCI) has constituted an investigation by its Director General (DG).

CCI Coram headed by its Chairman, Ashok Kumar Gupta has given the direction for investigation under Section 26(1) of the Competition Act, 2002 against MMT-GO and OYO for alleged violation of the provision of Section 3 (4) of the Act. Further, a prima facie case for investigation under Section 4 of the Act is also made out against MMT-GO by the CCI.

The DG has been directed to carry out a detailed investigation into the different violations and submit the report within 150 days.

The Commission has found substance in multiple aspects of the complaint related to the two entities by the hotel body which merit detailed investigation. However, the Commission stated that current observations “shall not tantamount to an expression of final opinion” which will come out after detailed investigation.

Among the key violations that CCI observed and needed detailed investigation include the restrictive agreement clauses of Room Parity and Price Parity that MMT-GO force upon the hotels; Predatory pricing; denial of listing on MMT-GO platforms to competitors of OYO like FabHotels, Treebo Hotels, etc.; misrepresentation due to delayed delisting of hotels and creation of artificial demand-supply gap on their portal, etc.

FHRAI in its submission had alleged MMT-GO creating artificial demand-supply gap on its platform and accordingly fluctuates prices. The Commission observed that such acts are “potentially abusive” and considering MMT-GO’s dominant position the market, needed to be investigated further. On the Predatory pricing and deep discounting issue, the Commission observed that considering MMT is active in the market since 2000, such practices do not appear to be “introductory aimed at building a network.”

Competition Commission of India has decided to investigate the charges after hearing the parties involved on the dispute in early August and subsequent written submission by the parties involved.

When contacted for comments on the development, Gurbaxish Singh Kohli, Vice-President, FHRAI and President, Hotel & Restaurant Association of Western India (HRAWI) said that they always wanted different stakeholders of the industry to “co-exist” and a healthy business environment toprevail. “This is not a happy situation at all. But we had no other alternative,” he said explaining the numerous attempts on the part of the hotel body to find a solution to the issues through discussions. “It was getting too much,” he added. He expressed happiness in the decision of the CCI to investigate the issues. “We had collected lot of materials and presented before the CCI. We hope that something will come out of it now.”
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