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Malaysia Airlines, AirAsia fined over tie-up

Sep 06 2013 13:10 AFP

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Kuala Lumpur - Malaysian authorities on Friday fined Malaysia Airlines and AirAsia for anti-competitive conduct during a short-lived tie-up.

The Malaysia Competition Commission (MyCC) said in a statement that the country's two dominant carriers would each have to pay a 10m ringgit ($3m) penalty for collaborating to integrate some routes in which they had earlier competed.

"When businesses agree to share markets, they are agreeing to stop competing, at the expense of the consumers," said commission chairman Siti Norma Yaakob.

AirAsia, the region's largest budget airline, agreed in August 2011 to hand over a 10% holding to a state investment fund in exchange for a 20.5% stake in the ailing flag-carrier Malaysia Airlines.

The deal was aimed in part at eliminating mutually harmful competition on some routes.

But it was unwound just eight months later following pressure from Malaysia Airlines' powerful employees union, which feared it could result in possible job losses and other cost-cutting at the national carrier.

Both airlines said they were reviewing the commission's decision with their lawyers and would respond. They have 30 days to do so.

AirAsia added in a statement that it intended to "vigorously" defend itself, saying it had taken steps to ensure that the deal complied with the law "in every respect".

Both airlines recorded profits in the second half of 2012. Malaysia Airlines, however, has been in the red this year while AirAsia has seen sharply lower profits.

MyCC said the penalties were decided based on revenue earned between January to April 2012 on four routes, and that it equalled less than 10% of their respective worldwide turnovers.

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