MyCC (Malaysian Competition Commission) decided last week to impose penalty of RM 10 million (US$ 2.8 million) due to a tacit agreement over sharing markets and controlling fares.
KUALA LUMPUR– This is something which is generally not very Asian: blaming in public prestigious national companies due to the fear of a “face-losing” factor. But this happened in Kuala Lumpur last week when the Malaysia Competition Commission (MyCC) issued its Proposed Decision regarding practices at both Malaysia Airlines and AirAsia Bhd. According to the MyCC, both airlines “have infringed section 4(2)(b) of the Competition Act 2010 (‘the Act’) by entering into an agreement that has as its object the sharing of markets in the air transport services sector within Malaysia provided by both airlines”.
“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 Tan Sri Dato’ Seri Siti Norma Yaakob, Chairman of the MyCC. The agreement between both carriers was signed two years ago.
“When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers”. Each airline will be fined and will have to pay RM 10 million (US$ 2.8million) for breaching competition laws.
Anti-competitive practice was signaled last February by the Federation of Malaysian Consumers Association (FOMCA). The institution submitted a complaint to MyCC about the potential anti-competitive implications of both airlines’ collaboration, judging that collusion on fares had appeared, especially with the termination of some routes by one or the other carrier. In a FOMCA statement, the federation gave as an example the withdrawal of MAS low cost subsidiary Firefly from routes to East Malaysia (Sabah and Sarawak). In return, AirAsia X, AirAsia’s long-haul airline, which was originally incorporated to provide low-cost long-haul flight services, terminated its services to London, Paris, New Delhi and Mumbai.
FOMCA had also raised the issues surrounding growing numbers of complaints against AirAsia in particular where customer services and frequent flight delays were concerned with the company generally showing poor responses to resolving disputes with its customers.
According to Dato Paul Selva Raj, Secretary General FOMCA, “the action taken by MyCC against these major players sends a strong signal to the market; anti-competitive behaviors are unacceptable. If companies persist, there will be consequences”.
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
