AirAsia fined

Malaysia Airlines (MAS) and AirAsia have been slapped with a RM10 million fine each for violating the Competition Act 2010 in their 2011 collaboration agreement. The Malaysian Competition Commission (MyCC) in a statement today said that in drawing up the agreement, the two were guilty of “market sharing” according to the Act.

“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 chairperson Siti Norma Yaakob.

“When businesses agree to share markets, they are agreeing to stop competing at the expense of their consumers,” she said in a statement.

On Aug 9, 2011 MAS, AirAsia and AirAsia X entered into a collaboration agreement that involved a share swap where Khazanah Nasional Berhad obtaining a 10 percent share in AirAsia and Tune Air Sdn Bhd obtaining a 20.5 percent stake in MAS.

The shares swap agreement violated Section 4(2)(b) of the Act, said Siti Norma. The said section prohibits any horizontal or vertical agreement between parties for the purpose of sharing a market or sources of supply.

The deal resulted in a “public outcry” she said, as well as a complaint letter from Fomca that precipitated in MyCC’s probe.

The penalty was outlined based on MAS’ and AirAsia’s turnover between Jan 1, 2012 to Apr 30, 2012 for four domestic routes – Kuala Lumpur-Kuching; Kuala Lumpur-Kota Kinabalu; Kuala Lumpur-Sandakan; and Kuala Lumpur-Sibu.

The dates for the penalty starts from the day the Competition Act came into effect and ended at the date when both airlines removed the reference to these routes in their supplemental agreement on May 2, 2012.

Although AirAsia X was also part of the agreement, the commission said it considered AirAsia X an enterprise that forms a single economic unit with AirAsia and hence the fine was made upon the latter.
• identification of the stakeholders and their interests;
• identification of the ethical issues clearly;