STAR, 4 January 2012
PETALING JAYA: The Malaysia Competition Commission (MYCC) wants AirAsia Bhd and Malaysia Airlines (MAS) to provide more information and documents regarding their share swap agreement to find out if it could potentially put air travellers at a disadvantage.
The MYCC, which began operations yesterday, would continue its probe if there was a breach of anti- competitive behaviour and abuse of dominant position in the deal which was signed in August.
It is also surprising that no one has lodged a complaint with the commission regarding the AirAsia/MAS share swap and collaborative deal even though it was widely criticised by many quarters.
The share swap and collaboration agreement forged between the two airlines had raised concerns that the absence of competition would result in more expensive airfares.
The MYCC is established under the Competition Commission Act 2010 to enforce the Competition Act 2010. Its main role is to protect the competitive process in the interest of businesses, consumers and the economy.
When contacted, MYCC chief executive officer Shila Dorai Raj said the commission had only received verbal complaints on the share swap issue. There are three ways for the MYCC to begin an investigation via a complaint lodged by someone with the commission, on its own accord or a directive from the Domestic Trade and Consumer Affairs Minister.
In the case of the share swap/collaboration agreement, Shila said the commission was acting on its own accord given the brouhaha surrounding the deal.
“We are going to request for information from both the airlines with regards to the share swap and collaboration, which were supposed to have been concluded in November. We need to know the exact contents of the agreement,” she said.
Without the documents, it would be impossible for the commission to make a conclusive study especially an economic analysis on the impact of such a collaboration on the consumers.
However, the commission “is not empowered to examine mergers and acquisitions.” Shila explained that it did not prevent the commission from checking on the collaborative activities arising after the merger and whether the activities were anti-competitive.
The commission is likely to give both airlines until the end of the month to revert with the information and documents that it needs to investigate the matter.
The commission also has the powers to extract information from both the airlines if they failed to oblige with the required documents.
The impact of anti-competition is higher airfares for the consumers. Some travellers in Sabah and Sarawak had alleged that the element of competition had been removed with the suspension of Firefly jet operations soon after the share swap deal was announced.
Under the share-swap deal AirAsia's major shareholder Tune Air Sdn Bhd now holds a 20.5% stake in MAS, while MAS' major shareholder Khazanah Nasional Bhd holds a 10% stake in AirAsia.
Under the collaborative agreement both parties would cooperate in the areas of ground handling, training and engineering among others. “The jet operations have infused competition in the KL-Kota Kinabalu (KK) and KL-Kuching sectors and fares were competitive but now the fares are not as competitive,” said an air traveller who commuted between KK and KL.
Whether the MYCC would find anything conclusive or if it has the clout to take both the airlines to task remained to be seen but AirAsia's sister airline, AirAsia X (AAX) surprised many travellers when it offered flat pricing for its KL-Dehli and KL-Mumbai routes.
“There is no longer the pull factor. Its pricing is now closer to what full service carriers offer, so where is the promise that low cost fares are 30% to 40% lower than full service carriers?” another traveller asked.
A check on the airline's web-site reveals that its KL to Mumbai airfare is RM694 (fares only) and for KL-Dehli, it is RM894 (fares only) unlike other destinations where there are several classes of high and low fares. The fares are applicable from Feb 15 to Oct 15 and the same rate is offered on the return journey.
“Whether it ties up with what the market is speculating (that the airline would suspend flights to India and Europe) is unclear, but for a low cost airline to charge like a full service carrier seems very strange,” the traveller added.
AAX CEO Azran Osman Rani, when contacted, said: “It is a commercial decision to have such fares. They are our non-promotional fares but we are working on a sale.” He declined to elaborate on the sale.
He added that the fares were structured in that manner because the cost to fly into Indian airports was higher than to Australia and the demand for flights to northern India was lower compared with southern India. “In reality, the airfares do not commensurate with cost,” he said.
Asked when AAX would begin plying the KL-Sydney route as there were talks that it would begin mounting flights to the capital city in April ahead of its rival, Scoot, Azran said: “Right now we have not received all the approvals, but we remain interested in Sydney.” Scoot is planning flights from Singapore to Sydney in the middle of this year.
Showing posts with label Competition Act. Show all posts
Showing posts with label Competition Act. Show all posts
Sunday, January 15, 2012
Tuesday, May 3, 2011
Firms Flouting Competition Act Can Be Fined Up To 10 Per Cent Turnover
Bernama, May 03, 2011
Because the penalty was high, advocacy programmes would be enhanced to ensure all parties including industry players, traders and the public understand the Act before it came into force in January next year, Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said today.
"We don't want the traders to say they don't know the Act because the implication is big if they flout the law.
"If we don't give them room to understand and so on surely problems will arise," he told reporters after the presentation of appointment letters to the chairman and members of the Malaysian Competition Commission here.
The commission was formed on April.
Its chairman is former Chief Judge of Malaya Tan Sri Siti Norma Yaakob.
Four members representing the government are Attorney-General Tan Sri Abdul Gani Patail; Domestic Trade, Cooperative and Consumerism Minister Secretary-General Datuk Mohd Zain Mohd Dom; International Trade and Industry Ministry Secretary-General Datuk Dr Rebecca Fatima Sta Maria; and Economic Planning Unit Director-General Datuk Noriyah Ahmad.
Five members representing the private sector are Asian Strategy & Leadership Institute chief executive Datuk Dr Michael Yeoh, Nilai International College vice president Datuk Dr Sothi Rachagan, Universiti Sains Malaysia Graduate School of Business Dean Prof Datin Dr Hasnah Haron, former Bar Council president Ragunath Kesavan and businessman Abd Malek Ahmad.
Monday, February 7, 2011
It's all about choice for consumers, firms
A wider range of products and services at better prices is in store when the new Competition Act is enforced, experts tell SANTHA OORJITHAM
New Straits Times, 6 February 2011
TRAVEL agencies in Malaysia have been told to charge a consultation fee when asked for a quotation or proposed tour package, starting last month.
The Malaysian Association of Travel and Tour Agents (Matta) has announced a fee structure which it says is a guideline, and which travel agents are free to adjust according to the service provided.
But Datuk Pardip Kumar Kukreja wonders if this would infringe the Competition Act 2010.
"What are the implications?" asks the executive chairman of the Paradise group of companies, which includes hotels and travel agencies.
"Can Matta impose that or not?"
The Act was gazetted in June last year but will not be enforced until January next year. Meanwhile, the Competition Commission will be appointed within the first quarter of this year and will produce guidelines by the end of the year.
After that, there will be a "transition period" of about six months for businesses and groups to comply, says Shila Dorai Raj, head of the Interim Competition Unit at the Ministry of Domestic Trade, Co-operatives and Consumerism.
"The impact will be huge," predicts Shila, who was on a roadshow to all the states.
"When we went to Sarawak in September last year, people were shocked. They said the Act would outlaw what they had been doing."
But the end result should benefit both businesses and individuals, since the Act aims to protect both the competition process and consumer interests.
The New Economic Model, announced last year, stressed private sector-led growth and promised that the government would not use its regulatory powers to protect Government-Linked Companies (GLCs) from competition.
"GLCs are subject to the law too, so they will not be able to hide behind the skirts of the government," points out Shila, although there will be exemptions for "services of general economic interest" such as postal services and water.
The Act will apply to all commercial activity -- including by government companies and public authorities. Shila notes that in 2009, the Malaysian Fisheries Development Board ordered fish importers, exporters and wholesalers to use insulated containers from one supplier.
If they didn't, they were liable to a fine of RM15,000 and/or two years' jail. That was eventually dropped and under the Act, such a practice would be an offence.
The law prohibits two kinds of anti-competitive practices -- anti-competitive agreements and abuse of dominant position. And if the commission determines there is an infringement, the financial penalty can be up to ten per cent of worldwide turnover of the enterprise during the period in which it happened.
Agreements include contracts and understandings, whether they are legally enforceable or not, and even the decisions of associations. For example, when Singapore bus operators discussed fixing the price on trunk routes to Kuala Lumpur and implemented it, the Competition Commission of Singapore prosecuted 16 of them and their Express Bus Agency Association and fined them S$1.69 million (RM4.03 million) for price fixing.
"If you don't agree to what your organisation is discussing when it is about issues relating to price fixing, don't attend," warns Shila.
Abuses of dominant position include predatory pricing (dropping the price below cost to wipe out competition and then increasing the price afterward) and tying or bundling -- such as a developer insisting that buyers get a mortgage or loan from their panel of banks.
"The consumer has to be given a choice, the chance to shop around and get a deal," says Shila.
There have been demands for Malaysia to address competition issues during negotiations for Free Trade Agreements, says Darren Kor, a lawyer who helped draft the Communications and Multimedia Act, which includes anti-competitive provisions.
With the Competition Act, he says, "Malaysia will gain more 'points' as an investment destination. Foreign investors do not want local enterprises to muscle them out. And locals, especially Small and Medium Enterprises (SMEs), also want the same protection."
With the Act, SMEs have an avenue to tackle anti-competitive practices, says Tan Sri Yong Poh Kon, immediate past-president of the Federation of Malaysian Manufacturers (FMM) and co-chair of the Special Task Force to Facilitate Business (Pemudah).
It will help to create "a business environment where monopolies and restricted oligopolies (control of a product or service by a few companies, influencing its price) are not created artificially through excessive government protection and interference with market forces."
"The Act will allow SMEs to operate more freely," says Pardip, who is an adviser to the Malaysian-Indian Business Association and whose group is an SME.
"If there is no control upstream they will have a much better negotiating base to get better pricing from suppliers. And people will be more open to entering various industries if there are no barriers."
As for consumers, they can take a civil case to court for loss or damage directly as a result of an anti-competitive practice prohibited under the Act. And the Federation of Malaysian Consumers Associations will be able to file a case with the commission, says its chief executive officer, Datuk Paul Selva Raj.
"The commission will deliberate and tell us their findings. We want that process to be transparent and to give their reasons. And we want investigation and enforcement to be strong."
By all accounts, the process of drafting the Act was open and transparent. The ministry set up a consultative group of 25 in 2007 with representatives from 10 ministries, 10 private sector organisations (including FMM) and five non-governmental organisations (including Fomca) to go through the declassified draft.
The Act includes "elements of good governance", notes Dr Cassey Lee Hong Kim at the School of Economics in the University of Wollongong, New South Wales. The commission is to publish its decisions, investigation results and market reviews.
FMM's Yong hopes the guidelines will be published in time for the private sector to "study, understand and provide feedback on any concerns or impractical applications regarding the proposed implementation of the Act".
In the meantime, businesses should begin to examine their own practices and systems and correct any which could be anti-competitive, he advises.
They could look at the guidelines used by some of Malaysia's major trading partners as the provisions are likely to be similar. Singapore, Thailand, Indonesia and Vietnam already have competition laws.
New Straits Times, 6 February 2011
TRAVEL agencies in Malaysia have been told to charge a consultation fee when asked for a quotation or proposed tour package, starting last month.
The Malaysian Association of Travel and Tour Agents (Matta) has announced a fee structure which it says is a guideline, and which travel agents are free to adjust according to the service provided.
But Datuk Pardip Kumar Kukreja wonders if this would infringe the Competition Act 2010.
"What are the implications?" asks the executive chairman of the Paradise group of companies, which includes hotels and travel agencies.
"Can Matta impose that or not?"
The Act was gazetted in June last year but will not be enforced until January next year. Meanwhile, the Competition Commission will be appointed within the first quarter of this year and will produce guidelines by the end of the year.
After that, there will be a "transition period" of about six months for businesses and groups to comply, says Shila Dorai Raj, head of the Interim Competition Unit at the Ministry of Domestic Trade, Co-operatives and Consumerism.
"The impact will be huge," predicts Shila, who was on a roadshow to all the states.
"When we went to Sarawak in September last year, people were shocked. They said the Act would outlaw what they had been doing."
But the end result should benefit both businesses and individuals, since the Act aims to protect both the competition process and consumer interests.
The New Economic Model, announced last year, stressed private sector-led growth and promised that the government would not use its regulatory powers to protect Government-Linked Companies (GLCs) from competition.
"GLCs are subject to the law too, so they will not be able to hide behind the skirts of the government," points out Shila, although there will be exemptions for "services of general economic interest" such as postal services and water.
The Act will apply to all commercial activity -- including by government companies and public authorities. Shila notes that in 2009, the Malaysian Fisheries Development Board ordered fish importers, exporters and wholesalers to use insulated containers from one supplier.
If they didn't, they were liable to a fine of RM15,000 and/or two years' jail. That was eventually dropped and under the Act, such a practice would be an offence.
The law prohibits two kinds of anti-competitive practices -- anti-competitive agreements and abuse of dominant position. And if the commission determines there is an infringement, the financial penalty can be up to ten per cent of worldwide turnover of the enterprise during the period in which it happened.
Agreements include contracts and understandings, whether they are legally enforceable or not, and even the decisions of associations. For example, when Singapore bus operators discussed fixing the price on trunk routes to Kuala Lumpur and implemented it, the Competition Commission of Singapore prosecuted 16 of them and their Express Bus Agency Association and fined them S$1.69 million (RM4.03 million) for price fixing.
"If you don't agree to what your organisation is discussing when it is about issues relating to price fixing, don't attend," warns Shila.
Abuses of dominant position include predatory pricing (dropping the price below cost to wipe out competition and then increasing the price afterward) and tying or bundling -- such as a developer insisting that buyers get a mortgage or loan from their panel of banks.
"The consumer has to be given a choice, the chance to shop around and get a deal," says Shila.
There have been demands for Malaysia to address competition issues during negotiations for Free Trade Agreements, says Darren Kor, a lawyer who helped draft the Communications and Multimedia Act, which includes anti-competitive provisions.
With the Competition Act, he says, "Malaysia will gain more 'points' as an investment destination. Foreign investors do not want local enterprises to muscle them out. And locals, especially Small and Medium Enterprises (SMEs), also want the same protection."
With the Act, SMEs have an avenue to tackle anti-competitive practices, says Tan Sri Yong Poh Kon, immediate past-president of the Federation of Malaysian Manufacturers (FMM) and co-chair of the Special Task Force to Facilitate Business (Pemudah).
It will help to create "a business environment where monopolies and restricted oligopolies (control of a product or service by a few companies, influencing its price) are not created artificially through excessive government protection and interference with market forces."
"The Act will allow SMEs to operate more freely," says Pardip, who is an adviser to the Malaysian-Indian Business Association and whose group is an SME.
"If there is no control upstream they will have a much better negotiating base to get better pricing from suppliers. And people will be more open to entering various industries if there are no barriers."
As for consumers, they can take a civil case to court for loss or damage directly as a result of an anti-competitive practice prohibited under the Act. And the Federation of Malaysian Consumers Associations will be able to file a case with the commission, says its chief executive officer, Datuk Paul Selva Raj.
"The commission will deliberate and tell us their findings. We want that process to be transparent and to give their reasons. And we want investigation and enforcement to be strong."
By all accounts, the process of drafting the Act was open and transparent. The ministry set up a consultative group of 25 in 2007 with representatives from 10 ministries, 10 private sector organisations (including FMM) and five non-governmental organisations (including Fomca) to go through the declassified draft.
The Act includes "elements of good governance", notes Dr Cassey Lee Hong Kim at the School of Economics in the University of Wollongong, New South Wales. The commission is to publish its decisions, investigation results and market reviews.
FMM's Yong hopes the guidelines will be published in time for the private sector to "study, understand and provide feedback on any concerns or impractical applications regarding the proposed implementation of the Act".
In the meantime, businesses should begin to examine their own practices and systems and correct any which could be anti-competitive, he advises.
They could look at the guidelines used by some of Malaysia's major trading partners as the provisions are likely to be similar. Singapore, Thailand, Indonesia and Vietnam already have competition laws.
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