IMPACT OF THE MAS-AIRASIA SHARE SWOP

The Malaysian Competition Commission (MyCC) is reviewing the possible impact of the Malaysia Airlines-AirAsia collaboration on the local market. MyCC will then advise both the airlines on the possible do's and dont's, its top executive said.

The commission decided to initiate the research as the Competition Act 2010 comes into force on January 1, 2012.

The Competition Act addresses anti-competition agreements and abuse of dominant positions while MyCC was established to take on complaints and decide if any infringements of the Act has taken place. The latter's focus is on curbing abuse by monopolies, and controlling anti-cartels by major corporations.


This follows concerns that the tie-up between the two airlines - which were until last week, fierce competitors - may now result in an anti-competition behaviour or monopoly. Consumers are particularly concerned about possible increase in airfares.

"MyCC has decided to look at what consequences this alliance will have on the market," MyCC chief executive officer Shila Dorai Raj told Business Times when contacted. "Once we have done a market research, we will advise Malaysia Airlines and AirAsia on the areas where they may cross the line," she said.

Last week, Khazanah Nasional Bhd agreed to swap a 20.5 per cent stake in MAS for a 10 per cent stake in AirAsia from the latter's majority shareholder, Tune Air Sdn Bhd. The parties have said that more detailed terms of collaboration will be revealed after a full anti-trust review by all three companies.

While the Act exempts certain sectors such as those dealing in matters of national interest, services of gen-eral economic interests and collective agreement, it does not provide special exemptions for government-linked companies (GLCs).

Once the Act comes into force, an affected party can lodge complaints to MyCC. "We will look at whether it merits an investigation, what significant effects it has on the market and what market are we talking about. The market has to be clearly defined," she said.

Action will then depend on the evidence that MyCC collects. The maximum fine for contravening the Competition Act is a 10 per cent of the company's worldwide turnover. MyCC is a 10-member commission and its chairman is the former Chief Judge of Malaya Tan Sri Siti Norma Yaakob.