CCI Fines MakeMyTrip and OYO for Anti-Competitive Conduct

MakeMyTrip and OYO Startup News

The Competition Commission of India (CCI) has fined MakeMyTrip and Oyo for anti-competitive conduct in hotel room listings. The CCI has fined both companies 5% of their annual turnover for a period of 3 years; Oyo was fined Rs 168.88 cr, while Make My Trip was fined Rs 223.48 cr.

The decision comes after complaints from budget hotel chains that the companies’ vertical integration agreement was creating dominance in the online hotel booking market, and that MakeMyTrip was deep discounting and enforcing terms that prevented rooms from being cheaper on other platforms. 

In a statement, Oyo indicated that the platform would appeal the ruling, saying "OYO believes that our business practices and conduct comply with all applicable laws & will take all necessary steps to explain our position in the appropriate forums."

A MakeMyTrip spokesperson also said the company would explore an appeal, saying that the platform was compliant with Indian laws. The spokesperson went on to say that "The CCI’s order is appealable before the National Company Appellate Tribunal within 60 days. We’ll determine our future action as per of our legal counsels advice .” 

The Federation of Hotel & Restaurant Associations of India (FHRAI) has welcomed the order. In a statement, FHRAI president Pradeep Shetty said, "This is by far one of the biggest wins for the hospitality industry against the dominance of the aggregators." 

Shetty added, "Oyo especially is responsible for the systemic depredation of the budget segment hotel business and its market as a means to achieve a notional billion-dollar valuation. This is a serious concern for our country’s hospitality ecosystem.” 

In addition to paying penalties, “MMT Go is directed to modify the agreements with hotels/chain hotels, to remove/abandon the price and room availability parity obligations imposed by it on its chain hotel partners w.r.t. other OTAs,” the order said. This essentially means that MMT cannot force hotels chains it has partnered with to offer higher prices or identical on other platforms. 

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The commission also ordered that hotel listings be offered on a transparent basis on the platform. The order will be appealed by both firms, but they should consider a defense based on their shrinking market shares in the segment. Anecdotal evidence indicates a strong push by many of their 'partner' hotels chains to not accepting such bookings made on these platforms as far as possible.

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Rohit Kapoor, Global CMO of OYO has quit to Join Swiggy

OYO Startup News

OYO's head of marketing Rohit Kapoor has quit the company following four years, according to three people with knowledge of the specifics. "Kapoor has already quit OYO and is currently serving his notice," said one of the sources who requested anonymity. "He's probably to be released from his duties at OYO in August."

This is a huge loss for OYO as a leader. Kapoor was promoted to worldwide chief marketing officer at the beginning of March this year, replacing Chief Executive Officer (Southeast Asia and India). He has been employed by the company based in Gurugram for 44 months. He then was appointed to OYO as the CEO of its rental business (India).

In the wake of Kapoor's appointment, OYO also said that its chief business officer worldwide, Ankit Tandon, will assume the responsibility for Southeast Asia with a specific concentration on Indonesia as well as the Middle East region as its CEO. Ankit Gupta, CEO of the Hotels and Homes vertical, was also promoted to CEO (India).

Swiggy Startup News

According to reports, Kapoor is in advanced discussions to join Swiggy in a higher position. "Kapoor is expected to join the food tech unicorn, assuming there is no change at the very last minute," said another source who requested anonymity because the talks are confidential.

The queries we addressed for Rohit Kapoor OYO, along with Swiggy, did not receive a prompt response. We'll revise the blog in the event they respond. Kapoor's resignation comes when OYO has seen a revival of its business following 18-24 months of slow growth caused by the pandemic. OYO had reported more than five times the growth rate in May and added over 1,250 corporate customers during the three months (March-May in the current year).

Before that, the company had several resignations from senior management in the second quarter of 2020. Gaurav Ajmera, the global Director of revenue management, and Burhanuddin Pithawala, the global Director of growth and marketing, quit the company in September. Mohit Bhatnagar, Sequoia Capital's Managing Director, has also resigned from the OYO board of directors to assume the role of an observer within the company's board in October 2020. Harshit Vyas, OYO India COO, resigned from the company in the past. The online marketplace has recently hired Vyas for Pepper Content as a chief business officer (CBO).

OYO has been planning to launch an IPO for quite many years. However, OYO's IPO plan is expected to come to fruition in the final quarter of the calendar year. In October of 2021, the company submitted the draft prospectus red herring (DRHP) to SEBI to raise an amount of Rs 8,430 crore.

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Microsoft Investment in OYO

Latest OYO Startup Funding News-

Satya Nadella, the CEO of Microsoft, has invested $5M in OYO, an Indian budget hotel chain. After Microsoft investment its value increased to $9Billion. It also plans to soon launch an initial public offering (IPO). According to OYO's regulatory filing, Microsoft has made 37 crores of investments in OYO through the issuance of equity shares and compulsory convertible cumulative preferred shares (CCCPS). SoftBank, which is one of the largest investors in OYO, valued OYO's hotel chain at $3 billion in its most recent quarters.

Oyo, the hospitality company headed by Ritesh Agarwal, has Didi Chuxing, Grab, and Airbnb as strategic investors. Ritesh Agarwal, founder, and CEO of Oyo, stated in July that the company would be looking into an IPO. After OYO announced recently that it had raised $660 million from global institutional financial backers, TLB (Term Loan A), the report on the Microsoft-OYO deal was published.

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A company statement stated that the offer was 1.7 times oversubscribed and that the company received commitments from top institutional investors of $1 billion.

It stated that the company will use these funds to pay off its debts and strengthen its balance sheet. OYO is India's only startup to be publicly rated. It was also rated by Moody's or Fitch - the two most respected international rating agencies.

TechCrunch claims that OYO could also move to Microsoft's cloud services through the Microsoft deal. OYO has been expanding its operations in many markets in recent years, including Europe and Southeast Asia.

Follow Entrackr for daily updates on OYO News and Latest Startup Funding News.

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