Tarushi Tewari

Background

Based on a complaint filed by The Federation of Hotel and Restaurants Associations of India, Competition Commission of India (CCI) found that Make My Trip-Go (MMT-Go) had indulged in Anti-trade practices. It had found that MMT-Go was being biased towards On Your Own (OYO) on its virtual platform and was not providing adequate space to its competitors. The CCI believed that MMT-Go was liable under Section 4(1), Section 4(2)(a)(i)  and Section 4(2)(c) of the Competition Act, 2002 for its anti -trade practices involving denial of market access to some of the hotels/chain hotels registered on it. It was also of the opinion that it had the power to levy a monetary penalty under Section 27 of the Act.

As a result, CCI imposed a fine of ₹ 223.48 crores on the online travel agency and had issued some directions to it which are as followed:

• MMT-Go should appropriately alter its agreements with chain hotels or hotels.
• It should also abrogate price and room availability parity which was imposed by it on its hotel/chain hotel partners.
• It should abrogate exclusivity conditions existing in the form of a D-minus clause.
• It should provide free and fair access to its platform to all its client hotels/chain hotels.
• Its website should be transparent and should disclose the properties that are not available on its platform either due to exhaustion of quota or due to termination of contract.
• It should duly inform all the hotels/chain hotels associated with it about the concerned modifications
• Though the company pertains to the hotel segment, its main business is providing online intermediary services. It is a two-sided platform therefore considering only its hotel segment would not be appropriate. That kind of a narrow approach might work for a traditional market set-up but not for a two-sided platform.
• Therefore, the entire company must be treated as one unit for the purpose of calculating the revenue.
• The commission levied a fine which was 5% of its revenue of financial years 2017-18, 2018-19 and 2019-20 which was calculated to be ₹ 223.48 crore.
• This amount was to be paid within a period of 60 days.

MMT-Go went in appeal before National Company Law Appellate Tribunal (NCLAT) against the order of CCI. The NCLAT, however, told the company to deposit 10% of the penalty amount as a condition for getting the appeal admitted as per a 2019 precedent titled Federation of Hotel & Restaurant Associations of India (FHRAI) and Anr. v. MakeMyTrip India Pvt. Ltd. and Ors. MMT-Go then approached the Delhi High Court in this regard. A single judge bench of Justice Prathiba M. Singh heard the case.

Submissions by the Petitioner

• The counsel for the petitioner submitted that NCLAT’s order was ambiguous in the context of the reason for directing the petitioner to pay 10% of the penalty levied on it.
• The counsel further requested the court to clarify that if the directed amount was deposited, there should be a stay on the recovery of the remainder of the penalty.
• The counsel was of the opinion that an appeal can be filed against the order of CCI before NCLAT under Section 53B of the Competition Act, 2002.

Submissions by the Respondent

• The counsel for the respondent submitted that it was clear that the remaining 90% of the amount of the penalty that was levied by the CCI would be stayed provided that 10% of the amount is deposited.
• NCLAT had made it clear that it had not interfered or dealt with any other part of the order given by the CCI.
• The counsel was further of the opinion that an appeal would lie against the order of the NCLAT under Section 53T of the Competition Act, 2002.

Judgment

No reason had been given by NCLAT for directing MMT- Go to pay 10% of the penalty levied on it by CCI. Further, no interim protection had been granted in the concerned order in the context of the stay of the 90% of the penalty levied. The appeal before the Court is the first appeal that has challenged the order of the CCI regarding the penalty levied. The Court believes that a deposit of the 10% could not have been made for the mere admission of the appeal. The Court directed that the recovery of 90% of the total amount of the penalty levied by the CCI on MMT-Go should be stayed, provided that the company deposits 10% of the total amount of the penalty. In the context of the other directions issued by the CCI, the company can approach the NCLAT. The court clarified that it had not adjudicated or decided upon the other contentions or merits of the case put forth by either the petitioner or the respondent in the court. This includes the maintainability of the present writ petition. The petition was disposed as per the above directions.

Conclusion

A free and fair market is an important pillar of a fair and just economy and acts as a catalyst for healthy competition in the market. Healthy competition is essential for the smooth functioning of the market and also the economy. As per the Competition law, the Competition Commission of India and the Courts can act as instruments to ensure the same in the context of India to ensure the same and also to prevent unfair trade practices and monopolies, which are an antithesis to the healthy competition in the market. Monetary penalty can act as effective deterrents to prevent this and should be imposed as and when required by the CCI. CCI is also empowered by Section 27 of the Competition Act, 2002 to impose penalties of such nature. The direction of depositing 10% penalty by the NCLAT was slightly arbitrary and a reason for the same could have been provided. The remaining 90% penalty has been stayed by the Delhi High Court as of now. It would be interesting to note what happens in the future in the context of this case.

Analysis

The final outcome of this case will be important when it comes to levying penalties on companies engaged in anti-competitive practices. Penalties need to be levied in a systematic and reasonable manner. The erring company should not be made to deposit the penalty in an arbitrary manner and a proper reason and adequate protection should be provided in this scenario. This is essential to ensure that the principles of fairness and justice are preserved and upheld.