The Competition Commission of India (CCI) on Monday ordered its director general (DG) to probe budget hotel operator Treebo Hotels’s charge that rival Oyo and travel service provider MakeMyTrip (MMT) had used their dominant market position to indulge in unfair trade practices. Finding weight prima facie in the allegations, it ordered the case to be clubbed with a similar case the companies are being probed under since October last year.
Treebo has alleged that since March 2018, subsequent to a deal between MMT and Oyo, it along with its partner hotels, is being excluded from listing on MMT, a dominant platform with a 63% market share in online intermediation services for booking of hotels in India.
The Bengaluru-based company has also alleged that Oyo dominates its market with an overwhelming 89% share and has significant amount of market power due to its strong financial standing and its commercial arrangement with MMT. Due to existence of network effects in such a market, there are huge barriers to entry for any new player in the market, it told CCI.
Treebo, founded by the trio of Rahul Chaudhary, Sidharth Gupta and Kadam Jeet Jain, claims that MMT and OYO renewed their commercial agreement in March 2019 for five years, with specific provision to exclude Treebo and Fab Hotels from listing on the former.
Treebo had been listing its hotels on MMT since July 2015. According to documents submitted to CCI, it was in February 2017 when MMT officials met Treebo founder Chaudhary with a proposal for investment in his company. Treebo has alleged that since the deal did not work out, all Treebo properties were removed from MMT’s platform in March 2017 in retaliation.
After nearly six months, MMT again decided to list Treebo back on MMT platform under conditions, signing two agreements in the process. Under one, Treebo had to maintain price parity with regard to the prices charged by it on MMT and other online travel agencies.
Under the exclusivity agreement, Treebo wasn’t permitted to list its ‘Category A’ hotels on MMT rivals, namely Booking.com (directly and indirectly) and Paytm (directly), 72 hours prior to check in. MMT annulled both the pacts through a 28 March, 2018 notice.
The Treebo case has now been clubbed with that of Federation of Hotel & Restaurant Associations of India’s allegations of 2019 that MMT and Oyo indulged in predatory pricing and other unfair trade practices.