MAS - AirAsia RM10 Million Fine Each - CA Left Consumers With 'Less Choice & Higher Ticket Prices' - MyCC

MAS, AirAsia agreement left consumers with 'less choice, higher ticket prices' - MyCC

BERNAMA
05/02/2021

PUTRAJAYA, Feb 5 -- The collaboration agreement (CA) between Malaysia Airlines (MAS) and AirAsia Berhad on sharing local air transport services has caused consumers to suffer from “less choice and higher ticket prices”, the Court of Appeal was told today.

Counsel Datuk Lim Chee Wee, who acted for Malaysia Competition Commission (MyCC), submitted that this was because the CA executed between MAS and AirAsia on Aug 9, 2011 had changed their position from competitors to collaborators.

“Essentially, both air carriers have infringed Section 4 of the Competition Act 2010 that bans market sharing. Consumers suffered due to that because they had less choice on which airlines they wanted to fly and have to pay higher ticket prices,” said Lim, adding that there was prima facie evidence that both air carriers breached laws governing market competition over a 2011 decision to share flight routes.

He argued before a three-member panel comprising Judges Datuk Hanipah Farikullah, Datuk Lee Swee Seng and Datuk Indera Mohd Sofian Abd Razak in proceedings conducted via “Zoom” video-conferencing.

The two air carriers are appealing against the Kuala Lumpur High Court ruling in December 2018 which had affirmed MyCC’s decision to impose a RM10 million fine each against AirAsia and MAS breaching a market-sharing prohibition.

To a question by Justice Lee on whether the CA should be voided after the Competition Act 2010 came into force on Jan 1, 2012, the lawyer said there was no clause in the CA about this.

“Another supplementary agreement executed on May 2, 2012 took away the clauses on market sharing. They should have terminated the CA because they thought they can obtain an exemption from MyCC,” he said, adding that the bid to file an application for exemption was later abandoned.

The hearing continues on Feb 19 for AirAsia's lead counsel Datuk Ambiga Sreenevasan and MAS’ lawyer Logan Sabapathy to respond.

MAS and AirAsia’s case with MyCC started in 2014 when the commission found both airline companies had breached the market-sharing prohibition under Section 4(2)(b) of the Competition Act by entering into an agreement on sharing markets in the air transport services sector within Malaysia.

MyCC has the power to fine both airlines 10 per cent of their global revenue for infringing the Act, but imposed a far lesser penalty because they were “cooperative” during investigations.

The RM10 million fines by MyCC were based on flights by both AirAsia and MAS in the four months between Jan 1 and April 30, 2012 on the Kuala Lumpur-Kota Kinabalu, Kuala Lumpur-Kuching, Kuala Lumpur-Sandakan and Kuala Lumpur-Sibu routes.