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Dominance under Control: CCI interim order against MMT-Go

By Ruchir Jain, Student at National Law University, Nagpur.

Introduction

On 09th March, 2021, the Competition Commission of India passed an interim order against Make-My-Trip & Go-Ibibo platforms (collectively ‘MMT-Go’), which are online hotel-booking service providers or Online Travel Agent, to relist the properties of FabHotels and Treebo on its platforms, owing to the reason that the said inaction has promoted unfair competition in the market.[1]

The FabHotels and Treebo (collectively ‘Applicants’) filed the application under section 33 of the Competition Act, 2002, asking the commission to order against the agreement entered between OYO & MMT-Go, pursuant to section 3 of the Act and against MMT-Go for abuse of its dominant position under section 4 of the Act, as they have de-listed them pursuant to the said agreement.

The commission in their order dated 28 September, 2019 held that prima facie it is clear that commercial arrangement between OYO and MMT-Go whereby MMT-Go agreed not to list the closest competitors of OYO on its platform, to be in contravention of the provisions of the Act.[2] The court also clarified that the position of the OYO can be considered as a significant player in the market for franchising services for budget hotels in India only, but not dominant player. This nullity of agreement makes the applicant to file for the interim order to again relist them on the MMT-Go platforms.

Position of MMT-Go

In the present case, the Applicants relied on the Competition Commission of India v. Steel Authority of India Ltd.,[3] and argued that all the three requirements of an interim order is satisfied i.e. (i) existence of a prima facie case; (ii) balance of convenience in favour of the claimant; and (iii) that irreparable damage would be caused to the claimant if the interim relief is not provided.[4] The MMT-Go refuted the request raised by the applicants on the ground that it is going to violate the MMT-Go’s commercial and contractual freedom to select the listing of hotels on their platforms. The Commission held in favour of the Applicants and held that they are able to satisfy the requirements laid down in the SAIL judgment in the present case.

The commission firstly cleared that the higher degree of satisfaction in the context of Section 33 as laid down by the SAIL judgment should be there instead of prima facie satisfaction as required under section 26(1).[5] The commission relied on its own order of 28.10.2019 where the court held that MMT-Go is a dominant player and OYO has substantial market share in the market, held that the agreement between a dominant player and another player with a sufficient market share will allow such player exploit the market and can also be proved detrimental towards other market and other market participants.[6] They analysed that applicants not listing has violated the provisions of competition act and hence such violation cannot be allowed to continue. Therefore, the commission is satisfied that the Applicants have a prima facie case, to a level of satisfaction as envisaged by SAIL judgment.[7]

The commission then analysed the second requirement of balance of convenience and held that the balance of convenience is favouring applicants. They analysed that the MMT-Go is not going to face any inconvenience if it provides a place to the applicants on their online platforms.[8] The court also analysed that MMT-Go is a dominant market player in online hotel booking platform. The non-accessibility to the applicants will lead to significantly hamper the online visibility of applicants and will cause loss to various budget hotels associated with the Applicants. Moreover, MMT-Go will also earn revenue in form of commission on every transaction done for the applicants hotel through their platforms. The commission also rejected the MMT-Go argument that they are lacking IT services to perform such act of re-listing, as they are already maintaining and managing the inventory of 72000 whereas the applicants requested the listing of only 600+ of FabHotels and 511 Treebo hotels.[9]

With respect to the third requirement, the commission held that the any of the two requirements as propounded by the SAIL judgment should be fulfilled i.e. either there is every likelihood that the party to the lis would suffer irreparable and irretrievable damage, or there is definite apprehension that it would have adverse effect on competition in the market.[10] The commission then analysed the arguments raised by the MMT-Go that the applicants are not barred to do their business through other methods and hence should not be considered as suffering damage. The commission then analysed the contemporary position of the online market platforms and observed that there is a upsurge in the online search, booking and shopping which was also catalyzed by the pandemic. These intermediaries platforms similar to MMT-Go allows the consumers to connect to the sellers/service providers similar to Applicants. The commission analysed that such online platforms has now affirmed their position in the market and their actions and inaction can influence and affect competition between business users significantly.[11] The commission concluded that the denial of access to a dominant online intermediation can be lethal to the functioning of businesses who rely on such intermediaries to reach the end-consumers.[12] The commission held that the applicants has faced serious loss due to delisting and such loss is aggravated by the pandemic and hence, such lack of access of the applicants on the largest and dominant OTA is likely to cause severe competitive injury.[13] Hence, the applicants will be incur irreparable loss if not ordered to re-list.

The Market Regulator

In this manner, the commission ordered in favour of Applicants and ordered MMT-Go to list the applicants on their platforms. The commission also analysed their role and held that they as a market regulator are required to regulate the market in such a manner that all stakeholders get an opportunity to compete on merits and get a fair chance to be part of digital commerce.[14] In this manner, the Competition Commission of India through this interim order again furthers the objective and purpose of the Competition Act and eliminated the exercise of dominant position by MMT-Go on online hotel booking platforms and ensure the fair and equitable level playing field for all the players thereby promoted fair competition at online fronts as well. Additionally, this order also paves way for other service providers to claim a remedy under the Competition Act, who might be deprived by their rights by the intermediaries who are exercising dominant position in the online platform.

Conclusion

However, most recently, the aggrieved party from the CCI order dated 09.03.2021 filed an appeal, under Article 226 of the Constitution of India, against the CCI order in the Gujarat High Court, where the Gujarat High Court in their order dated 23/03/2021, stayed the CCI order till the time they do not decide on the merit of the appeal.[15] Irrespective of the forthcoming judgement which the Gujarat High Court may pass on the said appeal, this interim order of the CCI reaffirm the stance of their existence as a market regulator and advances their scope of application on the online market i.e. even the intermediaries who are acting in the contravention to the object 7 purpose of the Competition Act cannot escape from the clutches of it.

References

[1] Federation of Hotel & Restaurant Associations of India (FHRAI) and Anr v. MakeMyTrip India Pvt. Ltd. (MMT) and others, Case No. 14 of 2019. Available at https://www.cci.gov.in/sites/default/files/Interim_Order_14-of-2019and01-of-2020.pdf.

[2] Order dated 28/10/2019, Federation of Hotel & Restaurant Associations of India (FHRAI) and another v. MakeMyTrip India Pvt. Ltd. (MMT) and others, Case No. 14 of 2019. Available at https://www.cci.gov.in/sites/default/files/14of2019_0.pdf.

[3] Competition Commission of India v. Steel Authority of India Ltd. (2010) 10 SCC 744.

[4] FHRAI supra note 1, at ¶7, ¶21.

[5] Ibid, ¶91.

[6] Ibid, ¶102.

[7] Ibid, ¶105.

[8] Ibid, ¶106.

[9] Ibid, ¶107.

[10] Ibid, ¶108.

[11] Ibid, ¶112.

[12] Ibid, ¶113.

[13] Ibid, ¶115.

[14] Ibid, ¶110.

[15] Oravel Stays Private Limited (Oyo) v. Competition Commission of India, Gujarat High Court, Civil Application No.  5085 of 2021.

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