The Fight To Capture The Throne In India’s Hotel Industry

What Happened?

Treebo has filed a complaint against MakeMyTrip (MMT) and Oyo to the Competition Commission of India (CCI) but these companies are already being investigated by CCI on charges of predatory pricing, creating a monopoly and deep discounting.

Why This Happened?

This was all started by a complaint from the Federation of Hotel and Restaurant Associations of India (FHRAI)

• In October 2019, FHRAI ordered the CCI director-general to investigate against Oyo and MMT because the firms had violated provisions of the Competition Act 2002.
• FHRAI alleged that both companies abused their dominant positions by charging exorbitant commissions from hotel partners and providing deep discounts, which caused the destruction of competitive pricing in the market.
• FHRAI also said that MMT and Oyo entered into confidential commercial agreements with each other and this agreement helped Oyo gain preferential treatment in MMT’s platform, blocking Treebo and FabHotels from accessing the market.
• FHRAI alleged that the commissions charged by MMT were 22–40% and this was extremely disproportionate compared to the commissions charged by other companies like Booking.com and Yatra.com
• FHRAI also said that these companies supposedly created an artificial demand-supply gap by employing techniques like fake bookings as well as providing hotel rooms at a much cheaper price.

Since it received the order from FHRAI, CCI has been investigating MMT and Oyo for a while but now, the complaint from Treebo Hotels has given birth to another investigation. So, now, CCI will do both investigations and submit a consolidated investigative report and these investigations will be as detailed as possible.

The Monopoly Crisis

These investigations bring a crucial problem to the spotlight (i.e) How some companies are trying to become a monopoly in a particular industry.

We know that being a monopoly is amazing for a company because it can make a lot of profits while taking absolute control of the entire market. But this is unfair for the customers and also, for the other small companies.

Fab Hotels ($50 million in total funding) and Treebo ($57 million in total funding) are going against Oyo, which has raised more than $3 billion in funding. And that’s a tough fight. So, we hope CCI’s investigation helps the government deploy measures to protect the small companies from the giants and ensure that there is fair competition in the market.

Because only fair competition leads to growth which also helps protect consumer interests.

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