RM10 million fine imposed on MAS and AirAsia reinstated

KUALA LUMPUR: The High Court here yesterday reinstated the decision of the Malaysia Competition Commission (MyCC) which imposed a fine of RM10 million each on the country’s two major carriers, Malaysia Airlines (MAS) and AirAsia Bhd for breach of market-sharing prohibition under the Competition Act 2010.

Judge Datuk Nordin Hassan held that the decision by the Competition Appeal Tribunal (CAT) in allowing the appeal by MAS and AirAsia to set aside the fine of RM10 million each imposed by MyCC was tainted with error of law and unreasonableness.

“In the circumstances, the first respondent’s decision (CAT) is set aside and the decision of the applicant (MyCC) is reinstated,” he said and ordered the two air carriers to pay RM10,000 in costs each to the applicant, MyCC.

Nordin also held that the tribunal (CAT) had failed to consider the collaboration agreement entered between the two air carriers over sharing markets in the air transport services sector had the effect of distorting competition.

He also said that the applicant had locus standi to initiate the review application as the action filed by MyCC was before the establishment of Mavcom and as such, the applicant’s right to commence the judicial was not affected.

Earlier, counsel Datuk Lim Chee Wee, presenting MyCC, requested MAS and AirAsia to pay the RM10 million fine within seven days to which Nordin said it was too short a time and asked both parties to submit on the matter.

The court then did not give any time frame for both MAS and AirAsia to pay the fine.

Outside the court, counsel Leonard Yeoh who acted for AirAsia told reporters that the company was unhappy with yesterday’s ruling and would file an appeal at the Court of Appeal.

MyCC filed the judicial review application naming CAT as the first respondent, while Malaysian Airlines System Berhad and AirAsia Berhad were named as the second and third respondents.

MyCC sought to quash the decision by CAT on Feb 4, 2016 which allowed the appeal by MAS and AirAsia to set aside the fine of RM10 million each imposed by it (MyCC) for breach of marketsharing prohibition under the Competition Act 2010.

MAS and AirAsia had appealed against the MyCC’s decision on April 11, 2014 which found that both airlines were in breach of the market-sharing prohibition under Section 4(2)(b) of the Act by entering into an agreement which saw the two airlines 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 levied a far lesser penalty because the airlines were cooperative during the investigation.

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