The Competition Commission of India‘s Rs 392 crore fine on online travel aggregators MakeMyTrip (MMT) and Goibibo and hospitality firm Oyo has triggered a fresh debate over price parity agreements and discounting practices enforced by consumer internet firms.

A price parity agreement in the consumer internet environment can be defined as a contract under which a supplier or seller is obliged to offer an exclusive or lower price or better terms to an online platform, even if the seller is working with other competing platforms.

Legal experts told FE that such equality clauses in contracts between hotel owners and online travel aggregators (OTAs) are common and won’t necessarily harm competition unless OTAs become a dominant force. CCI’s entire judgment is based on a review of whether MMT is the dominant force in the online travel market. CCI believes that MMT is the dominant player in the “online intermediary” business that aggregates hotels and hostels, ignoring offline markets and other metasearch engines.

MMT can appeal the ruling by trying to show that its total market share should be based on all available hotel booking options for consumers. These include metasearch sites such as Google and Expedia, online booking portals run by hotel brands, and direct front desk bookings in offline channels.

Booking.com, which barely has a single-digit market share in hotel bookings in India, also has parity terms, said R Sudhinder, a partner at Bangalore-based law firm Argus Partners. However, since it is not a dominant force, it will not adversely affect the competition. However, Sudhinder said CCI’s exclusion of relevant booking channels to determine MMT’s market share is controversial as internet consumers look at all suitable options before finalising a hotel booking.

Industry experts and lawyers interviewed by FE said price and room parity agreements are common, especially among online travel aggregators and other consumer internet applications. The Director General of CCI found in a survey of MMT and Oyo that “all OTAs in the hospitality industry have widely implemented room rate and room parity provisions”. But as far as the tourism market is concerned, such agreements are considered illegal in international jurisprudence, the CCI added in its order.

Still, MMT’s previous deals with Oyo to delist the latter rivals, such as FabHotels and Treebo, were widely viewed as “predatory” by legal experts and other executives in the travel market.

“During the CCI investigation, they (MMT and Oyo) did appear to be trying to justify their actions (removing competitors), but it is easy to see through it. There are many issues with the CCI order that could be challenged in court, but with this, at the same time, there were a lot of problems with the previous market behaviour of MMT and Oyo,” Sudhinder said.

While the CCI passed the order last week and noted Oyo’s exclusive deal with MMT. After the deal was signed, MMT delisted Treebo and Fabhotels, essentially denying them access to most markets. The CCI had earlier ordered MMT-Go to restore Treebo and FabHotels’ hotel room listings on its platform in March 2021 after the two startups approached the authorities in February 2020.

A lawyer representing clients in the CCI and various high courts told FE that Oyo was a significant player in the hotel franchise market when its main competitor was delisted from the MMT platform in 2018. After merging with Goibibo in 2017, MMT became the largest OTA booking market with a 70% market share. The lawyer said OYO’s partnership with MMT has created a monopoly in the hotel franchising vertical.

“The very public collaboration resulted in the illegal delisting of Oyo’s close competitors, such as FabHotels and Treebo, from the MMT platform. It also deprived competitors of access to the largest OTA booking platform. Setting barriers to market entry for hotel owners and others (travel) is not good for the aggregator, it is not good for the interests of the client, and thus seriously damages the interests of the whole country,” the lawyer said.