CCI imposes sanctions on MakeMyTrip, GoIbibo and OYO

The Competition Commission of India (CCI) on Wednesday imposed monetary as well as behavioral sanctions on MMT-Go (MakeMyTrip and GoIbibo) for abusing its dominant position and also for having an anti-competitive arrangement with OYO (Oravel Stays Limited).

The CCI carried out an in-depth analysis for the delineation of the relevant market, laying special emphasis on such assessment in the case of platform markets. Commenting on the role of interdependencies in two-sided or multi-sided markets, the CCI opined that it is important to understand the nature of the interaction and interdependencies between the different sides of a multi-sided platform so as to ascertain the impact of such interaction or inter-linkages in the analysis. However, the role of such interdependencies at the time of delineating relevant markets should be limited to understanding the impact of such interactions on the substitutability analyzed primarily from the aggrieved user side. 

When it appears that there are two distinct products/services which are being supplied (by the same seller, i.e., the OTA) to two distinct sets of buyers (end-consumers and hotel partners), ascertaining substitutability only from the perspective of one user group (i.e., the end-consumer in the present case) may erroneously conflate the competitive constraints that exist separately and distinctly in relation to each user side.

The CCI undertook a substitutability assessment from the perspective of both user groups. From the end-users’ perspective, the CCI relied upon the ‘Search, Compare, and Booking’ (SCB) functionality test and observed that, owing to the distinct characteristic features of the OTAs, they may not be comparable with other online modes.

The CCI first examined the parity obligation, via which MMT-Go was imposing wide price parity as well as room availability parity obligations on its hotel partners. However, what perplexed the CCI in the instant matter was the imposition of price parity in conjunction with other impositions, e.g., room parity obligations, deep discounting strategies, and exclusivity conditions, which warranted a simultaneous assessment of the impact and reinforcing nature of such impositions.

Based on an in-depth assessment, the CCI found that the deep discounts and parity conditions, in conjunction, create an ecosystem that reinforces MMT-Go’s dominant position in the relevant market. 

Firstly, it helps MMT-Go to retain and further increase its network of users/travelers, who would increasingly use the platform to avail the best deals. 

Secondly, it impedes the competitive process between OTAs by limiting the competitive levers/instruments at the disposal of other portals who, for instance, cannot get better prices from hotels by offering lower commission rates.  Thirdly, the consequent adverse effect on the sale of rooms through other platforms/channels and their user bases further accentuates the dependence of hotels on MMT-Go as well as the bargaining power imbalance that already exists between MMT-Go and its hotel partners. Fourthly, the increased sales through MMT-Go may lead to unilaterally determined higher commissions charged by it, giving it the ability to also pass on discounts which are admittedly funded through these commissions, which may adversely impact the prices at which the hotel rooms are being offered to end-consumers. The conduct of MMT-Go was thus found to be in contravention of Section 4(2)(a)(i) read with Section 4(1) of the Act.