AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1199
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....y referred to as 'MMT-Go' and Oravel Stays Private Limited (hereinafter, 'OYO') alleging contravention of the provisions of Sections 3 and 4 of the Act. MMT, Goibibo and OYO are collectively referred to as the 'Opposite Parties'. Facts, as stated in the information 2. The Informant is a company registered under the Companies Act and is the apex representative body of the Hospitality Industry in India. It is stated to be the voice of the Hospitality Industry and provides an interface between the Hospitality Industry, Political Leadership, Academics, International Associations and other Stakeholders. It claims to be the third largest hotel and restaurant association in the world. As per its website, 1,68,565 rooms, 2503 hotels, 1173 restaurants, 78 associates and 4 regional associations are attached to the Informant as its members. 3. MMT is an Online Travel Agency ('OTA') engaged in the business of providing travel and tourism related services in India. It is a part of MakeMyTrip group of companies (MMT Group). GoIbibo is also an OTA engaged in the business of providing travel and tourism related services in India. OYO is an unlisted private compan....
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....t earlier. The Informant stated that it has failed to receive any response from MMT with regard to such grievances. During this period, though MMT and OYO reduced the commission for some hotels, these reduced commission rates were still exorbitant. 8. In this backdrop, the Informant has alleged that the actions of the Opposite Parties are contrary to the provisions of the Act. The Informant has alleged that the Opposite Parties have abused their respective dominant positions, they have cartelized and further, they have entered into anti-competitive arrangements/agreements. The crux of the allegations are succinctly captured in the ensuing paragraphs. 9. The Informant submitted that MMT-Go, OYO, booking.com, yatra.com, cleartrip.com, expedia.com etc. are operating as OTAs in India, alternatively known as the domestic OTAs. While referring to the order dated 18.01.2017 of the Commission with respect to approval of merger/combination of MMT and GoIbibo, it has been submitted that the said merger has led to their dominance in the relevant market of OTA(s), which has empowered MMT-Go to operate independently of the competitive forces prevailing in the relevant market. 10. Further, it....
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....also resulted in rapid erosion of the revenue of the members of the Informant. Further, MMT-Go have been offering deep discounts to the customers which has further led to expansion of their network and retention of customers. Due to such conduct, the smaller players in the OTA market are being forced to exit. It has been further alleged that MMT-Go is competing on discounts, rather than prices, and thus their market performance is not based on efficiency, but on deep-pockets. With regard to OYO also, it has been stated that it resorts to predatory pricing wherein budget hotels in micro (small) markets are targeted. These budgets hotels are promised a minimum guaranteed sale and then low prices are fixed to achieve that minimum assurance. Such prices fixed by OYO are approximately 30% lower than the price of the hotels rooms that are not listed on its platform, due to which OYO hotels command higher occupancy. For this reason, the non-OYO Hotels are compelled to join OYO's platform as they are unable to withstand OYO's anti-competitive strategies in the market. 14. Further, it has been alleged that chain hotels/ hotel aggregators namely Treebo and Fab Hotels have been denie....
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....o discontinue their abusive/anti-competitive practices. 18. The Commission considered the information in its ordinary meeting held on 22.05.2019 and decided to call the parties for a preliminary conference on 17.07.2019. However, pursuant to a request made by MMT-Go through their common application dated 12.07.2019, the Commission decided to reschedule the preliminary conference on 06.08.2019. 19. On 06.08.2019, the Commission heard the Informant as well as the Opposite Parties through their respective learned counsel. The parties were given liberty to file their respective written submissions/synopsis. Subsequently, the parties filed their written submissions which were considered by the Commission on 27.08.2019. 20. While reiterating the allegations mentioned in the information, the Informant annexed various documents through its additional submissions filed on 19.08.2019. 21. MMT and GoIbibo filed common written submissions on 16.08.2019. Vide the said submission, they contested the allegations made by the Informant and described them as contractual disputes. MMT-Go objected to the allegation of collective dominance stating that the same is not enshrined under the Act. They ....
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....BAR) and Go-MMT is permitted to offer discounts on this price except where otherwise requested by a hotel. When a room is sold on platform, the hotel receives an amount equal to BAR less commission, irrespective of any discount provided by Go-MMT to customers. MMT-Go also claimed and explained, with the help of an illustration, that discount given to customer has no bearing on the amount paid to hotel. 26. OYO also denied each of the allegations made by the Informant. OYO submitted that it is not an OTA, rather it provides hospitality services itself and competes with other hotels in the market. Further, OYO contested the market share data relied on by the Informant. OYO relied on Redseer- report filed by MMT-Go, as per which OYO's market share is below 10%. OYO also relied upon the Commission's order in Case No. 03 of 2019, wherein relevant market was delineated as market for franchising services for budget hotels in India, and OYO was found not to be dominant and its conduct in relation to its agreements with hotel partners was found to be justified. Based on the said order, OYO submitted that it continues to be not dominant in any relevant market. 27. OYO stated that a....
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....ating that the same cannot be said to raise any competition concern. 30. With regard to the allegations under Section 3 of the Act i.e. anti-competitive agreement or cartelisation, OYO submitted that there cannot be any cartel, as MMT-Go and OYO operate at different levels in the market and are not competitors. Further, OYO stated that the theories of harm raised by the Informant can at best be scrutinized either under Section 4 or under Section 3(4) of the Act. As regards the vertical arrangement between MMT-Go and OYO, it was submitted that the Informant has not provided any evidence to show that these parties were engaged in a vertical anti-competitive agreement. 31. Based on the aforesaid averments, MMT-Go and OYO prayed that the information be closed under Section 26(2) of the Act. Analysis of the Commission 32. On perusal of the facts and allegations, the Commission observes that the Informant has alleged abuse of dominant position by the Opposite Parties collectively as well as individually. With regard to the allegation of collective abuse of dominant position by these Opposite Parties, it is noted that Section 4 of the Act currently envisages prohibiting only unilatera....
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....t market analysis needs to be carried out from the perspective of hoteliers i.e. the relevant product market should include all alternatives available with such hotels and the competitive constraints faced by the focal product i.e. the service provided by the Opposite Parties in the present matter. 36. The Informant has alleged that all the Opposite Parties are part of the same relevant market as they are all OTAs. 37. The Commission has had the occasion to examine the hospitality industry in general and allegations against OYO in particular in a recent case, i.e. in Case No. 03 of 2019 (RKG Hospitalities Pvt. Ltd. v. Oravel Stays Pvt. Ltd.) wherein the relevant market aspect to assess the position of OYO in the said relevant market was discussed in detail. The following observations made in the said case are relevant in context of the present case: 35. To commence a meaningful discussion for delineation of relevant product market and for further assessment, it is imperative to understand the sector under scrutiny. The hospitality industry has witnessed a tremendous change in the last decade. The change initiated with the emergence of OTAs like MMT, Goibibo, Yatra.com, Booking.c....
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.... budget hotels and on the other hand they serve the potential consumers looking for budget accommodation. Since the present case pertains to a grievance raised by a partner hotel, the relevant product market determination needs to take into account all alternatives available with such budget hotels and the competitive constraints faced by the focal product i.e. the service provided by OYO in the present case. 39. OYO has a network of budget accommodation, connecting the network hotels to potential customers under the brand "OYO Rooms", while each hotel on the network is an independent business providing services to the guests. The arrangement between OYO and the partner hotels is akin to the franchise model. Franchises give hoteliers access to identifiable brand recognition, existing distribution channels and a compelling customer base. The uniform and assured quality standard across the chain hotels is valued by consumers which is why hoteliers may choose to run a branded franchise hotel in order to take advantages of these benefits. In exchange, the franchise brand takes a percentage of the hotel's revenues or commission. In the case of OYO, the budget hotels on OYO's ne....
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....cing reliance on the said observation of the Commission, MMT-Go urged for a broader delineation of the relevant market. 40. Delineation of relevant market is based on market realities as they exist at the time of assessment. In rapidly changing markets in particular, market assessment cannot have a static approach. The Combination case cited by MMT-Go took place over two and a half years back. While this may not be a period sufficiently long for traditional markets to undergo perceptible change, the pace of evolution of digital markets is significantly faster. The intervening period has seen the online travel portals and the customised service that they provide to consumers on account of big data analytics to have established a distinct and significantly more prominent position in the hotel reservation space in India. In view of the increased popularity and use of OTAs by a large segment of consumers in India, hotel operators now perceive them as a distinct mode of distribution which cannot be simply replaced or substituted by other offline modes or direct sale without losing out significantly on consumer reach. Thus, on an overall consideration of the market realities and competi....
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.... compared this 40% annual growth rate post the acquisition between MMT & GoIbibo, to the growth rate of the relevant market which was only 10% during the relevant time period. It was argued that the growth at four times the industry average is 'abnormal' by any yardstick, and clearly shows that they are growing at the cost of all other OTAs. 45. MMT-Go on the other hand has countered the Informant's assessment of dominance. Relying on Commission's order in Combination Registration No. C - 2016/10/451 (acquisition of 100% of Ibibo Group Holdings by MMT Ltd) dated 18.01.2017, wherein the Commission observed that MMT and Go-Ibibo together accounted for less than 11% of the overall travel market in India as well as in narrower sub segments which included hotel bookings, MMT-Go has claimed that it is not dominant even for the purposes of the present matter. 46. The Commission has already given reasons for restricting the relevant market in the present case to be 'market for online intermediation services for booking of hotels in India' and given the said delineation of the relevant market, the market shares in a broader market, as claimed by MMT-Go, lose signif....
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....aphs. Room and Price Parity Impositions : 51. 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. Further, there is a room parity arrangement also which allegedly restricts the inventory made available to other OTAs vis-à-vis MMT-Go. 52. Across Platform Parity Agreements (APPAs), popularly referred to as 'retail Most-Favoured Nation (MFN) clauses', are stipulations where the sellers guarantee an online selling platform terms, price and/or non-price, that are at least as favourable as those granted to any other platform thus ensuring the former a competitive advantage over its competitors. By securing such favourable terms, the platforms attempt to guarantee the best available price and terms for a given product to its final consumers. 53. Analysis in such markets aims at evaluating whether such price or non-price restrictions lead to more concentration or enhanced entry barriers to the detriment of consumers which necessarily implies looking at the foreclosure effects....
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.... access. Further, the Informant has argued that pursuant to the commercial agreement between OYO and MMT, MMT gives preferential treatment to OYO on its portal, whereby the hotels of OYO are given preference, which leads to further denial of market access. 58. While dealing with Case No. 03 of 2019, the Commission had observed that Treebo and Fab Hotel operate in the same relevant market and are thus, competitors. From the search results presented by MMT on random queries for hotels across different locations, it appears that Fab Hotel and Treebo are indeed not present on this platform, while they earlier used to be. If this is a consequence of an agreement between OYO and MMT, which is also reported by media, to not list the closest competitors of OYO on the platform, it may potentially contravene the provisions of Section 3(4) of the Act. OYO as a budget hotel chain is in a vertical relationship with MMT, which is essentially a distribution platform for hotels. Both have considerable presence in their respective market segments and any restrictive agreement which may lead to refusal to deal with some players or exclusive arrangement with some players, may potentially have advers....
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....turn a finding on this issue especially when the market structure, entry conditions, cost structure of platforms etc. remain to be investigated. Misrepresentation of Information: 61. With regard to the misrepresentation due to delayed delisting and manipulation of market dynamics, the MMT-Go have cited certain justifications. The Commission is of the view that showing non-availability of rooms on the portal, instead of delisting them, even when the hotels have specifically requested for severing of ties with MMT-Go raises concerns. By showing such misleading information and creating information asymmetry in the market, the conduct of MMT-Go has the potential to deny market access to the concerned hotels. As normally understood, a consumer who once sees that a particular hotel is sold out, will not try to contact the hotel directly or try to book it from another portal. This means that such hotel would lose their prospective customers due to this restrictive conduct of MMT-Go that causes prejudice to the hotel owners who list their properties and denies them a fair access of the market leading to loss of business substantially. This also has an adverse impact on consumer welfare a....