KUALA LUMPUR: The Malaysia Competition Commission (MyCC) was mistaken in assuming that AirAsia Bhd intended to share a market with Malaysia Airlines as part of its share-swap agreement in 2011, the Competition Appeal Tribunal heard.
AirAsia, along with Malaysia Airlines (MAS), were appealing against the RM20mil fine imposed by MyCC over the airlines failed share-swap deal in 2011.
AirAsia through its counsel Tay Beng Chai and Leonard Yeoh submitted that MyCC had taken a shortcut in coming to its decision to fine the airlines and neglected to conduct a proper legal and economic analysis on whether the share-swap agreement had an intention to share the market in Malaysia’s aviation services.
AirAsia said MyCC was wrong in concluding the agreement resulted in Firefly ceasing to operate in four routes from Kuala Lumpur to Kota Kinabalu, Kuching, Sandakan and Sibu between January to April 2012.
It claimed that Firefly’s withdrawal of the routes was an independent decision by MAS because Firefly was suffering from heavy losses, and was never part of the airlines agreement.
AirAsia also contended that MyCC was wrong in applying the Competition Act retrospectively, as the FireFly routes MAS was being penalised for were withdrawn prior to the Act’s commencement in January 2012.
MAS was represented by S. Logan, while MyCC was represented by N. Nahendran.
The hearing continues today before the Competition Appeal Tribunal, chaired by High Court Justice Hasnah Mohamed Hashim.
The panel also included industry veterans Tan Sri Dr Lin See-Yan, Tan Sri Haidar Mohamed Nor, Tan Sri Dr Sulaiman Mahbob and Dr Wan Liza Md Amin.
On April 11 last year, MyCC found both airlines guilty of anti-competition practices, under Section 4(2)(b) of the Competition Act 2010 by entering into an agreement which saw the two airlines sharing markets in the air transport services sector within Malaysia.
The Government-led equity tie-up between AirAsia and MAS, inked on Aug 9, 2011, fell through and was officially called off by Khazanah Nasional Bhd on May 2, 2012.
Despite the deal being called off, MyCC proceeded with the anti-competitive probe when the Act enabling it came into force on Jan 1, 2012; after the AirAsia-MAS deal was instituted.
MyCC’s RM20mil fine was based on flights mounted by both AirAsia and MAS in the four months between Jan 1 and April 30, 2012 on the following routes – KL-Kota Kinabalu, KL-Kuching, KL-Sandakan and KL-Sibu.
The penalty – RM10mil each on AirAsia and MAS – was less than the maximum fine of 10% of the companies’ respective worlwide turnovers between January and April 2012, the time of the infringement.
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