NCLAT Stays CCI’s INR 169 Cr Penalty On OYO


The NCLAT directed OYO to pay a deposit of 10% of the penalty before it hears the appeal filed by the company against the CCI order

Industry body FHRAI hailed the decision and called the move ‘yet another positive step’

In October, the CCI imposed a penalty of INR 168.88 Cr on OYO for anti-competitive practices

The National Company Law Appellate Tribunal (NCLAT) on Tuesday (November 22) effectively stayed the INR 168.88 Cr penalty imposed by the Competition Commission of India (CCI) on hospitality major OYO.

While taking up OYO’s interim application for immediate stay on the penalty, the NCLAT also directed the hospitality major to pay 10% of the penalty as deposit before it hears the appeal.

“The appeal is admitted subject to deposit of 10% of the penalty amount which must be deposited within a period of six weeks. Deposit should be in the form of FDR in favour of (the) Registrar, NCLAT,” an order issued by the Tribunal said. 

The order was passed by an NCLAT bench comprising Justice Rakesh Kumar, Member (Judicial) and Ashok Kumar Mishra, Member (Technical). The bench also listed the matter next for hearing on April 11, 2023. 

OYO refused to comment on the story, saying the matter is subjudice.

On the other hand, the Federation of Hotel & Restaurant Associations of India (FHRAI) hailed the decision and called the move a ‘yet another positive step’.

“The latest development of Hon’ble NCLAT ordering OYO to deposit 10% of the total fine of INR 168 Cr imposed by the CCI is yet another positive step in the interest of the hospitality sector in the country. As a result, OYO is now required to pay close to INR 17 Cr as the initial monetary fine to ensure hearing of their appeal in the Hon’ble NCLAT,” said FHRAI secretary general Jaison Chacko. 

“FHRAI will continue to pursue the matter further for the benefit of thousands of small and budget hotels in the country and to discipline the OTAs in the new digital era so as to ensure a fair market, healthy competition and a level playing field for all stakeholders,” he added.

This comes nearly a week after OYO, on November 15, filed an appeal before the NCLAT against the October 19 order of the CCI that imposed a penalty of INR 168.88 Cr on OYO for anti-competitive practices.

The penalty was part of a nearly three-year long detailed investigation into the matter, launched way back in 2019.

The Case

The crackdown on OYO came as part of the CCI’s overarching crackdown on online travel aggregators MakeMyTrip and Goibibo as well as OYO for unfair business practices.

Besides the penalty on OYO, a separate penalty of INR 223.48 Cr was also imposed on MMT-Goibibo.

At the centre of the drama was the contention that the consolidated entity of MMT-Goibibo imposed price parity on hotel partners which barred partner hotels from offering their rooms at lower prices on their own websites or on other platforms.

The CCI ruling also noted that MMT-Goibibo allowed preferential treatment to OYO, thereby causing denial of market access to other players. Citing the ‘anti-competitive arrangement’, the competition watchdog also stated that the OTA had delisted OYO’s two competitors -Treebo and FabHotels – from its two online portals in 2018. 

The CCI order was passed on a plea filed by FHRAI. Since then, the industry body has launched a multi-pronged tactic to corner the hospitality giant. Last week, FHRAI wrote to the Securities and Exchange Board of India (SEBI) to halt OYO’s initial public offering (IPO) on the grounds of the recently imposed CCI penalty. 

OYO also continues to be bogged down by its performance. While the IPO-bound hospitality giant reported an EBITDA-positive first quarter during the current financial year (Q1 FY23), it reported a loss of INR 1,939.8 Cr in FY22.

The startup has also been in the line of fire owing to SoftBank’s markdown of the valuation of its stake in OYO by nearly 30%

Amidst the current market volatility, the hospitality major has also deferred its IPO. However, it is pertinent to note that the startup is not the only one that has delayed plans to go public. New-age tech startups such as MobiKwik, boAt, Snapdeal and Droom have also deferred their IPOs.

You have reached your limit of free stories
Become An Inc42 Plus Member

Become a Startup Insider in 2024 with Inc42 Plus. Join our exclusive community of 10,000+ founders, investors & operators and stay ahead in India’s startup & business economy.

Unlock 60% OFF
Cancel Anytime
Unlock 50% OFF
Cancel Anytime
Already A Member?
Discover Startups & Business Models

Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the hottest startup deals, supercharge your innovation projects, and stay updated with expert curation.

NCLAT Stays CCI’s INR 169 Cr Penalty On OYO-Inc42 Media
How-To’s on Starting & Scaling Up

Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn to validate ideas, acquire customers, secure funding, and navigate the journey to startup success.

NCLAT Stays CCI’s INR 169 Cr Penalty On OYO-Inc42 Media
Identify Trends & New Markets

Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence, understand market landscapes, and decode emerging trends to make informed decisions.

NCLAT Stays CCI’s INR 169 Cr Penalty On OYO-Inc42 Media
Track & Decode the Investment Landscape

Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful investors, and keep track of upcoming funds, accelerators, and more.

NCLAT Stays CCI’s INR 169 Cr Penalty On OYO-Inc42 Media
NCLAT Stays CCI’s INR 169 Cr Penalty On OYO-Inc42 Media
You’re in Good company