Court of Appeal sets aside financial penalties imposed by MyCC on MAS and AirAsia

28 April 2021

The Court of Appeal delivered a decision on 27 April 2021 allowing the appeals by Malaysian Airline System Berhad (“MAS”) and AirAsia Berhad (“AirAsia”) to set aside financial penalties of RM10 million each imposed by the Malaysia Competition Commission (“MyCC”) on MAS and AirAsia for breach of the Competition Act 2010 (“the Act”) by entering into a collaboration agreement on sharing markets in the air transport services in Malaysia.

Based on news reports¹, the grounds for the Court of Appeal’s decision are as follows

The Competition Appeal Tribunal (“CAT”) is an appellate authority and MyCC must abide by its decision. MyCC cannot ignore or challenge the decision of the appellate authority unless it is expressly provided by the Parliament.

MyCC is not an aggrieved party under Order 53 rule 2 of the Rules of Court 2012 and is therefore not entitled to seek a judicial review of CAT’s decision.

MyCC had not shown that CAT’s decision to overturn the RM10 million fine imposed on each of the airlines was irrational and the threshold for leave to commence judicial review had not been met by MyCC.

The collaboration agreement between the parties was entered into before the Act came into force and therefore it was “perfectly lawful” to discuss such agreement at the material time.

In light of the grounds set out in paragraphs 1 and 2, the ground set out in paragraph 3 may be an alternative ground of decision or be obiter dicta.

By way of background, MyCC had imposed the fines on both airlines in 2014 after it found that both AirAsia and MAS breached the market sharing prohibition under Section 4(2) of the Act. On appeal by both airlines, CAT overturned MyCC's decision to impose the fines in 2016. Following that, MyCC then sought a judicial review of CAT’s decision which resulted in the fines being reimposed by the High Court in 2018.

A more detailed commentary will be published when the Court of Appeal’s grounds of judgment are available.

Alert by Sharon Chong (Partner), Tan Shi Wen (Partner) and Manshan Singh (Senior Associate) of the Competition Law Practice of Skrine.

¹ ‘AirAsia and MAS manage to set aside RM10m fines’, The Edge Markets (theedgemarkets.com), 27 April 2021 and ‘MAS, Airasia win appeals to quash RM10 million fine over market-sharing prohibition breach’, The New Straits Times (nst.com.my), 27 April 2021.

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Court of Appeal sets aside financial penalties imposed by MyCC on MAS and AirAsia