Budget hotel chain Oyo and booking platform MakeMyTrip are under investigation by Indian regulators over accusations that the two companies entered into an agreement to stifle competition, according to a report by the Financial Times.
The Competition Commission of India (CCI) said there was “prima facie” grounds for a probe into whether Oyo was given preferential treatment by the site, a move which would have harmed competing companies.
Oyo is one of the largest hotel chains in the world, and it aims to be the biggest by 2023. It’s 6 years old, and its rapid growth has attracted big name investors, like Japan’s SoftBank. The fact that Oyo brings on franchisees has helped its expansion, too.
The CCI is also looking into whether MakeMyTrip created fake gaps in supply and demand, and intentionally set prices based on those artificial terms. The allegations against Oyo and MakeMyTrip were brought on by The Federation of Hotel & Restaurant Associations of India, who said the companies “abused their respective dominant positions, they have cartelized and further, they have entered into anti-competitive arrangements/agreements.”
The probe should have its results in about 150 days, the CCI said. Both companies deny the accusations and said they don’t have a cartel together because they exist in different industries.
“We are a fully compliant organization and have utmost faith in our administrative and judicial processes,” Oyo said.
The company added that the CCI didn’t find it had a particularly “dominant” market position.
“We are confident of demonstrating compliance with principles of competition law while providing our partners and consumers the best in class services,” MakeMyTrip said.
Oyo is an important property for SoftBank, which recently was forced to take over WeWork after it tried and failed to go public.
Because of WeWork’s fall from grace, Oyo’s $10 billion valuation is being scrutinized by investors. Oyo said it is now available in about 80 countries.