Softbank-backed Oyo hotels, MakeMytrip to face probe in India for alleged violations

Oyo told Hotelier Middle East that it will "actively engage" with the Competition Commission of India

Reports suggest that the body complained about Oyo receiving preferential treatment from MakemyTrip on its platform, thereby stifling competition
Reports suggest that the body complained about Oyo receiving preferential treatment from MakemyTrip on its platform, thereby stifling competition

India has opened an investigation into claims that Oyo Hotels and Homes and hotel-booking platform MakeMyTrip are engaged in practices to cut-down competition.

Investigations were reportedly launched after the Competition Commission of India (CCI) received complaints from the Federation of Hotel & Restaurant Associations of India.

Reports suggest that the body complained about Oyo receiving preferential treatment from MakemyTrip on its platform, thereby stifling competition.

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According to a report by India’s Financial Times (FT), the competition watch-dog in India said that it found grounds for an investigation into the allegations that the two parties entered an agreement that gave Oyo preferential treatment on the booking platform.

In addition to this investigation, the CCI is also looking into allegations about MakeMyTrip “artificially creating gaps in supply and demand and changed prices accordingly”, FT reported.

However, when Hotelier Middle East contacted Oyo, the company said: "The Hon’ble Competition Commission of India (CCI) has acknowledged that OYO Hotels and Homes is a hotel chain and not an Online Travel Agency (OTA) while noting that the company is not in a dominant position. With respect to the dismissed allegations, the order from the hon’ble CCI further states that the hospitality company is not engaged in any predatory pricing, and is neither charging exorbitant commissions from hotels which are a part of its chain.

"The CCI has acknowledged that OYO and Make My Trip - GoIbibo (MMT-Go) operate in different segments and that OYO as a budget hotel chain is in a vertical relationship with MMT, which is essentially a distribution platform for hotels. The CCI has directed to investigate the complaint filed by FHRAI against MMT, Go-Ibibo and OYO as it pertains to alleged violation of the provisions of Section 3(4) of the Act only. The concern expressed is around whether OYO’s contractual relationship with MMT, as part of an arrangement, may have an adverse effect on competition. OYO stands ready to extend full support to the investigation and as a law-abiding corporate citizen, has full faith in the administrative and the judicial process."

An Oyo spokesperson told Hotelier, "OYO Hotels and Homes is a fully-compliant organisation and have utmost faith in our administrative and judicial processes. We will continue to cooperate with Hon’ble CCI’s investigation process as we review the complete order. We will actively engage with the Hon’ble Commission in this process. We are also thankful for CCI’s recognition of the fact that OYO is a hotel chain and for dismissing certain prima facie allegations regarding price parity, predatory pricing, exorbitant commissions, etc. Given that the matter is sub-judice, we have nothing more to share at the moment.’’

Even as Oyo continues to expand across the world, the company has been facing issues in India.

In September, an Indian hotelier filed a case against Ritesh Agarwal, founder of India’s Oyo Hotels on charges of fraud and cheating. The hospitality group had denied all the charges.

Earlier in June, Oyo threatened to take legal action against groups in India for trying to disrupt its business after around 67 partner hotels went on a strike for two days.

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