China’s Ministry of Commerce has arranged a meeting with Ctrip and related parties to inquire the case against Ctrip under anti-monopoly and fair trade rule.
Ctrip's eLong acquisition puts a hole in Qunar challenge in the hotel booking segment
Qunar levels monopoly accusation at Ctrip
The case against Ctrip was filed by major OTA and Ctrip’s rival Qunar on August 7. Qunar alleges that Ctrip’s acquisition of competitor and major OTA eLong in May this year amounted to monopoly.
Qunar accuses Ctip and eLong of holding over 50% of the hotel booking market after the acquisition and also claims Ctrip has a de facto controlling stake in eLong after the acquisition, through its close relationship with two other investors, Plateno Group and Luxuriant Holdings. Qunar claims Ctrip’s control of eLong exceeds the standard limit that mandates declaration under the State Council Provision on the notification of Concentration of Undertakings (Law 529).
Qunar also accuses Ctrip of using its control of eLong to create a monopoly in China’s travel market and put pressure on the hotel industry supply chain by demanding them to cut business ties with Qunar or withhold the lowest prices in a bit to squeeze out their bitter rival.
Ctrip downplays the market effect of its eLong acquisition
Ctrip has responded by declaring it is law abiding and conducts all its operations within the boundaries of PRC laws. It claims its investment in eLong is a “strategic one” and it is merely a minority shareholder among many shareholders. “We can see that Tencent has already made a buyout offer to eLong. If successful, it will give Tencent an almost equal stake as Ctrip,” Ctrip claims.
Ctrip says Ctrip and eLong only take up 5% share of China’s huge domestic travel market now and therefore can’t realistically impact the entire industry.
Ctrip also dismisses Qunar’s complaint and acquisitions as “irrational behavior coming from a company cracking under pressure”.
Ctrip and Qunar facing battle royale over hotel bookings
As one of the oldest OTA brands, Ctrip holds a dominant position in China’s online travel market. Its nemesis and relentless competitor Qunar has been closing in on the profitable hotel booking market over the last two years having gained a footing in air ticket bookings. Observers say that Ctrip’s eLong acquisition has put it on a collision course with the aggressively expanding Qunar over the hotel bookings segment.(Translation by David)