6 April 2021
In an interim order dated 9 March 2021[1], the Competition Commission of India (“CCI”) has asked MakeMyTrip India Private Limited (“MMT”) and Ibibo Group Private Limited (“Ibibo”) to relist the hotels of Casa2Stays Private Limited (“FabHotels”) and Rubtub Solutions Private Limited (“Treebo”) on their platforms.
The CCI granted interim relief while adjudicating the applications filed by Treebo and FabHotels. The Competition Act, 2002 (as amended) (“Act”) gives power to the CCI to grant temporary injunction restraining any party from carrying on acts which are in contravention of certain provisions of the Act, until the conclusion of such inquiry or until further orders.
Mandatory Conditions to Issue Interim Order
The CCI, while reiterating the decision of the Hon’ble Supreme Court in the case of CCI v. Steel Authority of India Limited[2], assessed the conditions required to be satisfied to issue an interim order. The conditions as identified by the apex court are:
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record its satisfaction (which has to be of much higher degree than formation of a prima facie view under Section 26(1) of the Act) in clear terms that an act in contravention of the stated provisions has been committed and continues to be committed or is about to be committed;
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it is necessary to issue order of restraint; and
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from the record before the Commission, 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.
Under the first condition, the CCI stated that the degree of satisfaction for forming a prima facie view ‘is a tentative view at that stage’ as opposed to a ‘definite expression of the satisfaction recorded by the Commission’.[3]
The CCI noted that the facts before it are more compelling than the prima facie stage, thus, meeting the higher threshold required to fulfil the first condition.[4]
While addressing the arguments of the parties pertaining to relevant market, the CCI observed that there was no requirement to modify the definition of the relevant market as was defined in the prima facie stage.[5] Further, the CCI was also of the view that there was no reason to believe that MMT/ Ibibo were no longer dominant in the relevant market since market conditions have not changed.
On the second condition dealing with balance of convenience, the CCI held that non accessibility of the platform to FabHotels and Treebo may hamper their online visibility, which if provided, does not seem to cause any harm to MMT/Ibibo. In fact, MMT/Ibibo will earn revenue in the form of commission on every consummated booking through their portals. Therefore, the CCI observed that balance of convenience lies in favour of the claimants.[6]
With regard to the third condition, the CCI held that impugned exclusion of Treebo and FabHotels has the dangerous probability to irreversibly alter the competitive landscape, especially in the franchisee budget hotel downstream market and may tip the market in favour of Oravel Stays Private Limited (“OYO”) causing irreparable harm to competition.[7]
The CCI noted that MMT/Ibibo has not denied having an agreement with OYO because of which FabHotels and Treebo were delisted from the online portals.[8] The CCI held that it cannot be oblivious to the fact that an exclusivity arrangement between a dominant player and another player with a significant market power in the vertical chain can possibly allow such players to bolster their respective strengths, which may not augur well for the market or its other participants.[9]
The CCI finally held that it is convinced that the conduct of MMT/Ibibo in delisting and continuing to delist franchisee service providers, specifically FabHotels and Treebo, as well as the budget hotels that were availing some logistic support from them, has affected competition in the market. Therefore, the CCI found it a fit case to exercise its discretion to allow interim relief in the matter, till further orders.
OYO preferred an appeal against the Interim Order with the Hon’ble Gujarat High Court, which in its order dated 23 March 2021 granted a stay on the Interim Order. The Gujarat High Court stated that the Interim Order was passed without giving OYO an opportunity of being heard. Further, it was also observed that prima facie the CCI had violated principles of natural justice while passing the Interim Order.[10]
Trends on grant of interim relief by the CCI
The power to grant interim relief is a seldom used provision under the Act with the CCI exercising this power only in 5 (five) cases since 2009.[11] In recent times, the CCI has used this provision in the case of Indian National Ship Owners Association v. Oil and Natural Gas Corporation Limited[12] wherein all the conditions specified by the apex court were satisfied for issuance of an interim order. An undertaking had been given by the opposite party to not invoke the contractual clause in dispute, till further orders.
Further, in the case of Confederation of Real Estate Developers Association of India-NCR (“CREDAI”) v. Department of Town and Country Planning, Government of Haryana & Others (“Respondent”)[13], the CCI granted interim relief to CREDAI, wherein the developers were compelled to pay external development charges (“EDC”). The CCI noted that despite collecting EDC from developers, the Respondents have failed to undertake any external development services. The CCI, while granting interim relief to developers, held that the developers have paid 10% of EDC amount and deposited 25% in the form of bank guarantee, therefore, Respondents will not take coercive measures against developers for remaining instalments, till the final disposal of the matter.
To conclude, it should be noted that one of the primary reasons which weighs in the mind of the CCI while exercising its power to grant interim relief is not merely the harm caused to a party seeking a relief under the said provisions, but also the likely harm that has been caused or can be caused to competition in the market if the impugned act/conduct is not restrained at the interim stage pending an inquiry.[14]
For further information, please contact:
Anshuman Sakle, Partner, Cyril Amarchand Mangaldas
anshuman.sakle@cyrilshroff.com
[1] Case No. 14 of 2019 and Case No. 1 of 2020 (“Interim Order”).
[2] (2010) 10 SCC 744.
[3] Interim Order, at Paragraph 91.
[4] Interim Order, at Paragraph 93.
[5] Interim Order, at Paragraph 98.
[6] Interim Order, at Paragraph 107.
[7] Interim Order, at Paragraph 114.
[8] Interim Order, at Paragraph 100.
[9] Interim Order, at Paragraph 102.
[10] Special Civil Application No. 5085 of 2021.
[11] Case No. 01 of 2018 (order dated 15 June 2018), Case No. 40 of 2017 (order dated 1 August 2018), Case No. 107 of 2015 (order dated 13 April 2016), Case No. 06 of 2015 (order dated 3 September 2015) and Interim Order.
[12] Case No. 01 of 2018, order dated 15 June 2018.
[13] Case No. 40 of 2017, order dated 1 August 2018.
[14] Interim Order, at Paragraph 92.
