PUTRAJAYA,Jan 12: The Court of Appeal was told today that an agreement between Malaysia Airlines (MAS) and AirAsia on sharing local air transport services did not breach laws governing market competition.

AirAsia’s lawyer Ambiga Sreenevasan said that when both airlines entered into the collaboration agreement on Aug 9, 2011, the Competition Act 2010 had yet to come into force. The law only came into force on Jan 1, 2012.

“At the same time when the CA (collaboration agreement) was entered, a swap in shares took place. The CA was initiated by Khazanah when MAS was having a problem at the material time,” she added.

The High Court had in 2018 affirmed the Malaysia Competition Commission’s (MyCC) decision to impose a RM10 million fine each against AirAsia and MAS for breaching a market-sharing prohibition.

However, the court did not set a time frame for AirAsia and MAS to settle the fine.

Ambiga said another supplementary agreement was entered between AirAsia and MAS on May 2, 2012 after the Competition Act came into force.

“As a matter of general principle, the law should not be applied but the commission argued that if even you had entered into an agreement before the law came into force, the effect of the agreement carries on.

“In fact, AirAsia and MAS had written to MyCC before Jan 1, expressing their intention to obtain an exemption for the CA as it did not involve alleged anti-competition acts,” she said.

When asked by Court of Appeal Judge Hanipah Farikullah on whether AirAsia and MAS had officially filed their applications for exemption, Ambiga said both airlines did not do so in the end as MyCC had started investigations against them for allegedly breaching anti-competition rules.

Also on the bench were Lee Swee Seng and Mohd Sofian Abd Razak.

“This is not a case of two airlines secretly distorting the market,” Ambiga said.

Meanwhile, MAS’ lawyer Logan Sabapathy said the CA did not infringe the law since it was signed in 2011.

He added that the Competition Act had excluded matters related to the aviation industry after 2015 when the Mavcom Act came into force.

The hearing continues on Feb 5, where MyCC’s lawyer Lim Chee Wee will reply to the submissions from AirAsia and MAS.

MAS and AirAsia’s dispute with MyCC began in April 2014 when the commission found both airline companies had breached the market-sharing prohibition under Section 4(2)(b) of the Competition Act by entering into an agreement on sharing markets in the air transport services sector within Malaysia.

At that time, MyCC said it had the power to fine both airlines 10% of their global revenue for infringing the law, but had imposed a far lower penalty because the airlines had cooperated during the investigation.

The RM10 million fines by MyCC were based on flights by both AirAsia and MAS in the four months between Jan 1 and April 30, 2012 on the KL-Kota Kinabalu, KL-Kuching, KL-Sandakan and KL-Sibu routes.


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