AirAsia, Malaysia Airlines fined for flouting competition rules

Reuters
An Airbus A380, owned by Malaysia Airlines, lands ahead of the Farnborough Airshow 2012 in southern England
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An Airbus A380, owned by Malaysia Airlines, lands ahead of the Farnborough Airshow 2012 in southern England July 8, 2012. REUTERS/Luke MacGregor

KUALA LUMPUR (Reuters) - Malaysia's competition watchdog on Friday fined national carrier Malaysian Airline System Berhad (KLS:MAS) and budget airline AirAsia Berhad 10 million ringgit ($3 million) each for breaking competition rules in a pact that later fell through.

The Malaysia Competition Commission said in a statement that the carriers had entered an agreement in 2011 aiming to share markets in domestic routes in breach of competition regulations.

The agreement, which was to have involved a $364 million ringgit share swap, fell through in May 2012.

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

AirAsia said in a statement it would fight the decision.

"AirAsia has always put compliance as our utmost priority and similarly we have taken necessary steps to ensure that the collaboration arrangement was in compliance with applicable law in every respect," it said.

Malaysia Airlines, in a stock exchange filing, said it was reviewing the decision and taking legal advice.

($1 = 3.3050 Malaysian ringgit)

(Reporting by Siva Sithraputhran; Editing by Dale Hudson)

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