Tuesday, 05 May 2020 09:57 AM MYT
According to Australian authorities, swift action in enforcing competition laws will be taken by its antitrust watchdog3 against anti-competitive behaviour such as attempts to swamp airline routes, artificially push down prices or lock in exclusive deals with airports and suppliers in a bid to ensure that airlines are able to compete effectively as the industry rebuilds.
As any notification regarding an anticipated merger or merger under MACA 2015 is on a voluntary basis, parties are required to assess whether a merger may result in a “substantial lessening of competition” and determine whether a merger notification should be made to the Malaysian Aviation Commission , an independent entity established under the MACA 2015 to regulate economic and commercial matters related to civil aviation in Malaysia.
Factors such as market power and market concentration, competitive effects arising from horizontal mergers and vertical mergers should also be considered. Typical competition issues applicable to the airline industry would include code-sharing, price-fixing, airport capacity and slots allocation, frequent flyers programme, corporate discount schemes, travel agent commissions and tariff coordination.
Combined with other relevant factors in totality including the ability to impose excessive, predatory or discriminatory pricing and the capacity to profit from a price above competitive levels for a sustainable period, that would indicate that the enterprise holds significant market power and the potential for abuse of its dominant position may arise.
This defence, which has been typically used in merger proceedings as a last resort argument, contends that regardless of anti-competition issues which may arise as a result of the merger, the alleged failing party involved in the merger would exit the relevant aviation service market and competition provided by that party would be lost anyway.
In this regard, MAVCOM has asserted that it will strictly assess the merits of any such claim to ensure that parties are not abusing the law while acknowledging that aviation industry players are facing unprecedented challenges arising from the economic crisis caused by the Covid -19 pandemic.Interestingly, just recently in South Korea, the acquisition of Eastar Jet by its rival, Jeju Air, both being South Korean’s notable low-cost carriers, was approved by the country’s antitrust watchdog.
As at the date of this article, the High Court has set aside the decision of the Malaysian Competition Appeal Tribunal and reinstated the decision of MyCC in that the said collaboration agreement had distorted competition in the aviation sector in Malaysia, as it had the object of market-sharing within the Malaysian air transport services sector for the purpose of maximising commercial revenue.
No one should fly for now.
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