On 27 April 2021, the Tay & Partners team led by Mr. Tay Beng Chai, together with co-counsel Dato’ Ambiga Sreenevasan, successfully secured landmark competition law rulings from Court of Appeal whilst setting aside MyCC’s MYR10 million market sharing decision.

This case involves the country’s two major carriers, Malaysian Airline System Berhad (“MAS”) (now known as Malaysia Airline Berhad) and AirAsia Berhad (“AirAsia ”), who entered into a conditional collaboration agreement together with AirAsia X Bhd (“ Collaboration Agreement”) as part of a short-lived share swap deal between Khazanah Nasional Bhd and Tune Air in 2011. The share swap was unwound in 2012.

On 31 March 2014, the Malaysia Competition Commission (“MyCC”) ruled that the Collaboration Agreement infringed the prohibition against market-sharing under Section 4(2)(b) of the Malaysian Competition Act 2010 (“Act”) and imposed financial penalties of MYR10 million (approximately USD 2.43 million) on AirAsia.

On appeal by AirAsia, the five members of the Competition Appeal Tribunal (“CAT”) presided by Datuk Hasnah Mohamed Hashim (now Federal Court judge), unanimously decided that the MyCC misinterpreted the Collaboration Agreement and failed to show there was a market sharing object. Dissatisfied, MyCC filed a judicial review application to the High Court to review the CAT’s decision. In December 2018, High Court Justice Datuk Nordin Hassan (now Court of Appeal judge) reversed the decision by CAT.

Today, the Court of Appeal unanimously set aside the High Court decision and reinstated the CAT’s decision.

In allowing AirAsia’s appeal, the Court of Appeal agreed with the submissions made by counsels for AirAsia and made a landmark ruling that MyCC, a quasi-judicial authority established under the statute, is functus officio after making a finding of infringement or non-infringement under the Act. MyCC has no personal interest in the confirmation or reversal of its order and as such, it is incompetent to file a judicial review application against the CAT’s decision. The Court of Appeal also noted based on the statutory scheme that MyCC cannot challenge CAT’s decision, who is an appellate authority, unless such power is provided by the Parliament.

The Court of Appeal further held that MyCC cannot invoke the deeming provision under Section 4(2) of the Act and allege market sharing infringement without specifying the “market”. In this case, MyCC merely referred the market to the “aviation service industry”.

The Court of Appeal also held that liability cannot be attributed to parties based on disclosure of a conditional agreement that is subject to antitrust clearance in conjunction with an exemption application under Section 5 of the Act, as it does not make commercial sense to allow for an exemption application to be made under Section 5 (which must be based on an agreement), only to run the risk of immediately attracting liability if the application is rejected.

Mr. Tay Beng Chai¹, lead partner for the Tay & Partners team, noted that this landmark decision “brings clarity to the extent of MyCC’s powers and jurisdiction for competition matters”. “The concurrence by the Court of Appeal with the decision by the CAT will also come as a welcome endorsement by the judiciary of the work of the specialised CAT“.

AirAsia’s Tay & Partners team consists of Mr. Tay Beng Chai (Partner), Ms. Nicole Leong (Partner), Mr. Wong Weng Yew (Partner) and Ms. Heng Jia (Associate). Co-counsel Dato’ Ambiga Sreenevasan was assisted by Ms. Janini Rajeswaran and Mr. Lim Wei Jiet of Sreenevasan.

MAS was represented by Mr. Logan Sabapathy and Ariel Francis from Messrs. Logan Sabapathy & Co., while Datuk Lim Chee Wee, Mr. Kwan Will Sen and Mr. Muayyad Bin Khairulmaini of Lim Chee Wee Partnership appeared for MyCC.

This update is based on the brief grounds of judgment delivered orally by the Court of Appeal. A detailed update will be provided once the written grounds of judgment of the Court of Appeal are available.

Tay Beng Chai is Managing Partner and Head of Competition Law and Antitrust and Nicole Leong is a Partner at Tay & Partners.

¹ Leading individual for Antitrust/Competition Law in Malaysia on Chambers and Partners and The Legal 500 Asia Pacific

Tay Beng Chai
Managing Partner
T: +603 2050 1881
bengchai.tay@taypartners.com.my

Nicole Leong
Partner
nicole.leong@taypartners.com.my