Whether a collaboration agreement between Malaysia Airlines Berhad, AirAsia Berhad and AirAsia X Sdn Bhd infringes the Competition Act 2010?
COMPETITON COMMISSION V COMPETITION APPEAL TRIBUNAL & 2 ORS  2 AMR 657
- Malaysia Airlines Berhad (“MAS”), AirAsia Berhad and AirAsia X Sdn Bhd (collectively, “AirAsia”) had entered into a Collaboration Agreement (“Agreement”).
- The objective of the Agreement was to utilise the parties’ respective core competencies, optimise and increase competitiveness for the benefit of consumers and to be able to compete effectively with other industry players.
- A day before the coming into force of the Competition Act 2010 (“Act”), MAS on behalf of AirAsia, had written to the Malaysia Competition Commission (“Commission”) notifying it of their intention to seek an exemption under the Act in respect of the Agreement.
- After the execution of the Agreement, Fly Firefly Sdn Bhd, a subsidiary of MAS, withdrew its operation from several domestic routes.
- Subsequent thereto, the Federation of Malaysian Consumers Association lodged a complaint with the Commission regarding the collaboration between MAS and AirAsia.
- Upon completion of its investigation, the Commission concluded that MAS and AirAsia had infringed the Act and a penalty of RM10,000,000-00 was imposed against both MAS and AirAsia (“Commission’s Decision”).
- MAS and AirAsia appealed against the Commission’s Decision to the Competition Appeal Tribunal in accordance with section 51(1) of the Act (“Tribunal”).
- The Tribunal found in favour of MAS and AirAsia and set aside the Commission’s Decision.
- The Commission appealed to the High Court.
HIGH COURT DECISION – APPEAL ALLOWED!
The High Court allowed the appeal and set aside the Tribunal’s decision on the following basis:
- It is clear from the plain reading of section 4(1) of the Act that the Act prohibits a horizontal or vertical agreement between enterprises which has the object or effect of significantly preventing, restricting competition in any market for goods or services.
- The Commission’s case against MAS and AirAsia was premised on the fact that the Agreement has an anti-competitive objective. Based on the Agreement, MAS and AirAsia will each have their own route and areas of operation without having to compete with each other as before, are able to control the ticket pricing, which is to the disadvantage of the consumers.
- As the Agreement has the objective of sharing the market, the Agreement is deemed to have the objective of significantly preventing, restricting or distorting competition, which is prohibited by the Act and thus amount to an infringement of the Act.