Malaysian Insider, 6 September 2013
Flag carrier Malaysia Airlines (MAS) and AirAsia have been fined RM10 million each for their short-lived share swap which was found to have distorted the domestic aviation service.
The Malaysia Competition Commission (MyCC) said both airlines had infringed Section 4(2)(b) of the Competition Act 2010 by sharing their markets in their eight-month pact.
“Market sharing is considered a serious infringement under the Act as it is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods and services,” said MyCC chairman Tan Sri Siti Norma Yaakob in a statement released in Kuala Lumpur today.
“When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers,” she said.
Monopolies are not illegal in Malaysia per se, but anti-competitive behaviour is an offence under the Competition Act 2010. MyCC deals with allegations of firms partaking in deals that restrict, prevent or distort competition in any market involving goods or services.
The statement said the financial penalties imposed on the two airlines were based on the turnover earned between January 1, 2012 and April 30, 2012 for the Kuala Lumpur-Kuching, Kuala Lumpur-Kota Kinabalu, Kuala Lumpur-Sandakan and Kuala Lumpur-Sibu routes.
"The MyCC concludes that in respect of the infringement of Section 4(2)(b) of the Act, the MyCC will impose a financial penalty of RM10 million on MAS and AirAsia respectively," she said.
The financial penalties are less than 10% of their respective worldwide turnovers between January and April 2012, MyCC said.
The two airlines have 30 days from today to respond to the commission’s decision.
On August 9, 2011, MAS, AirAsia and AirAsia X Sdn. Bhd. entered into a Comprehensive Collaboration Framework with the declared aim to sharpen the focus of core competencies, deliver better product and choice for customers and ultimately create greater value for all stakeholders.
The agreement also witnessed Khazanah Nasional Berhad and Tune Air Sdn Bhd entering into a share swap arrangement which resulted in cross-holding of shares between the two companies.
Tune Air Sdn. Bhd obtained a 20.5% stake in MAS and Khazanah Nasional Berhad obtained a 10% shareholding in AirAsia under the share swap.
It was also agreed between the parties that MAS was to be only a full-service premium carrier, while AirAsia and AAX will be regional low-cost and medium-to-long haul low-cost carriers respectively.
However, the swap agreement was rescinded in May 2012 due to difference of opinions between the parties and complaints were made to MyCC that the share swap would create a monopoly in domestic routes and raise fares.
According to MyCC, the body tasked with probing complaints of anti-competitive behaviour in local and foreign firms operating in Malaysia, it has received 40 complaints in total since it came into force in January 2012. - September 6, 2013.
Flag carrier Malaysia Airlines (MAS) and AirAsia have been fined RM10 million each for their short-lived share swap which was found to have distorted the domestic aviation service.
The Malaysia Competition Commission (MyCC) said both airlines had infringed Section 4(2)(b) of the Competition Act 2010 by sharing their markets in their eight-month pact.
“Market sharing is considered a serious infringement under the Act as it is deemed to have the object of significantly preventing, restricting, or distorting competition in any market for goods and services,” said MyCC chairman Tan Sri Siti Norma Yaakob in a statement released in Kuala Lumpur today.
“When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers,” she said.
Monopolies are not illegal in Malaysia per se, but anti-competitive behaviour is an offence under the Competition Act 2010. MyCC deals with allegations of firms partaking in deals that restrict, prevent or distort competition in any market involving goods or services.
The statement said the financial penalties imposed on the two airlines were based on the turnover earned between January 1, 2012 and April 30, 2012 for the Kuala Lumpur-Kuching, Kuala Lumpur-Kota Kinabalu, Kuala Lumpur-Sandakan and Kuala Lumpur-Sibu routes.
"The MyCC concludes that in respect of the infringement of Section 4(2)(b) of the Act, the MyCC will impose a financial penalty of RM10 million on MAS and AirAsia respectively," she said.
The financial penalties are less than 10% of their respective worldwide turnovers between January and April 2012, MyCC said.
The two airlines have 30 days from today to respond to the commission’s decision.
On August 9, 2011, MAS, AirAsia and AirAsia X Sdn. Bhd. entered into a Comprehensive Collaboration Framework with the declared aim to sharpen the focus of core competencies, deliver better product and choice for customers and ultimately create greater value for all stakeholders.
The agreement also witnessed Khazanah Nasional Berhad and Tune Air Sdn Bhd entering into a share swap arrangement which resulted in cross-holding of shares between the two companies.
Tune Air Sdn. Bhd obtained a 20.5% stake in MAS and Khazanah Nasional Berhad obtained a 10% shareholding in AirAsia under the share swap.
It was also agreed between the parties that MAS was to be only a full-service premium carrier, while AirAsia and AAX will be regional low-cost and medium-to-long haul low-cost carriers respectively.
However, the swap agreement was rescinded in May 2012 due to difference of opinions between the parties and complaints were made to MyCC that the share swap would create a monopoly in domestic routes and raise fares.
According to MyCC, the body tasked with probing complaints of anti-competitive behaviour in local and foreign firms operating in Malaysia, it has received 40 complaints in total since it came into force in January 2012. - September 6, 2013.
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