Is there merit in FHRAI's demand from SEBI to stop Oyo IPO?

22 Nov 2022 , 09:15 AM

Federation of Hotel and Restaurant Associations of India (FHRAI) has written to SEBI to not allow Oyo from floating its IPO. The ground for this request is the penalty that Competition Commission of India (CCI) imposed on Oyo. In October, CCI imposed a total penalty of Rs 392 crore on Oyo, Goibibo, and Make My Trip.  CCI found these companies guilty on indulging in anti-competitive practices. These practices included making hotels enter into exclusive tie-ups with them. 

A company found guilty of anti-competitive practices has to pay the fine imposed by CCI for the same. It also has to discontinue the practices that CCI found anti-competitive. There is no provision in law that such a company can be stopped from bringing an IPO in future. The area of anti-competitive practices does not fall within the purview of SEBI. SEBI’s role is to ensure that a company complies with all the rules and regulations regarding IPOs.

Oyo filed DRHP for a Rs 8430 crore IPO, with SEBI, in October last year. Since then it has postponed its IPO plan because of weak market conditions.