Do you know what net neutrality is? It is the principle that an internet service provider (ISP) has to provide access to all sites, content and applications without any bias, favour or ill-will. It has to provide access to all content at the same speed, without any conditions attached or without restricting/blocking or giving preference to any content. Apparently, several market players have been violating this fair policy of net neutrality to mint profit.
MMT-Go and OYO caught red handed doing unfair business practices
Recently, the Competition Commission of India (CCI) revealed that MakeMytrip-Goibibo (MMT-Go) and OYO were involved in serious violations of standard market practices. Notably, these market practices are meant to provide a level playing field to all players in the market and prevent undue advantage to anyone on the basis of money or muscle power.
The CCI findings revealed that these travel and logistic service providers had been indulging in unfair market practices. The alleged violations gave these travel aggregators an illicit advantage over their rivals. They made the maximum profit by exploiting these unfair practices and tried to suffocate their rivals.
Pertinent to note that the CCI had been investigating these companies since 2019. It had received allegations by a hotel body that MakeMyTrip (MMT) was giving special treatment and privileges to the SoftBank-backed OYO on its platform.
Following the exposure, the CCI imposed a hefty fine of Rs 392 crore on the online travel aggregators MakeMyTrip, Goibibo, and OYO for indulging in these alleged unfair business practices. The fine includes ₹223.48 crore on Make My Trip-Goibibo and ₹168.88 crore on OYO. The fine is said to be to the tune of 5% of their estimated turnover.
CCI imposes penalties of Rs 223.48 crores and Rs 168.88 crores upon MMT-Go and OYO respectively, besides directing MMT-Go to amend its market behaviour, for indulging in anti-competitive conduct.
— ANI (@ANI) October 19, 2022
Illegal imposition of price parity
The CCI alleged that the travel aggregators, MMT-Goibibo, had illegally imposed price parity on its hotel partners. It had allegedly imposed a price party through its agreement with hotel partners. Under the price parity cap, the hotel partners were not allowed to sell their rooms on any other platform or even on their own online portals at a price below the price at which it was being offered on the MMT-Goibibo platform.
Further, the Chief competition regulator, CCI, had thoroughly probed the commercial arrangement between MMT-Go and OYO. Through this arrangement, the travel and logistic service providers delisted FabHotels and Treebo from their online portals in 2018.
The order said, “Based on the material available on record, the CCI found that there was an agreement/understanding between OYO and MMT-Go which was in the nature of a vertical arrangement amenable to Section 3(4)(d) read with Section 3(1) of the Act and the same had adversely affected competition in the market by denying access to an important channel of distribution through foreclosure.”
CCI forces MMT-Go, OYO to amend its terms of agreement
Besides imposing hefty fines on MMT-Go and OYO, the market regulator also made sure that these organisations don’t repeat these violations in future and mend market practices as per its whims and fancies. Evidently, the CCI prescribed modifications in their agreements to do away with exclusivist conditions/clauses within their agreement with their hotel partners.
The order said, “MMT-Go has been inter-alia directed to modify its agreement with hotels/chain hotels to remove/abandon the price and room availability parity obligations with respect to other OTAs and also the exclusivity conditions that exist inter-alia in the form of D-minus clause.”
The CCI also directed MMT-Go to provide fair and transparent access to all their hotel partners following an objective approach rather than following discriminatory and exclusivist approach.
The CCI order stated, “MMT-Go is directed to provide access to its platform on a fair, transparent and non-discriminatory basis to the hotels/chain hotels, by formulating the platforms‘ listing terms and conditions in an objective manner.”
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Notably, MakeMyTrip (MMT) had acquired Ibibo Group Holding in 2017. Since then, MMT has been operating its hotels and packages business through MMT India under the brand name MakeMyTrip, while Ibibo India has been carrying out its business under the brand name Goibibo.
These travel aggregators had been indulging in unfair market practices even at the expense of brazenly cheating their users/consumers. But the latest stringent action by CCI will ensure that no player in the market gets an unfair advantage over others.
As they say, the market should be run only on the basis of supply and demand without any market force hindering the normal course of market trend. The CCI will make sure that established big sharks don’t end up eating smaller fish and kill competition within the country.
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