Malaysia – Draft Guidelines Published By The Malaysian Aviation Commission.

 

20 March, 2018

 

MAVCOM has recently published three draft guidelines which are: 

 

• the Guidelines on Anti-competitive Agreements; and 
• the Guidelines on Abuse of Dominant Position.
• the Guidelines on Aviation Service Market Definition;

 

These are some of the highlights.

 

Draft guidelines on Anti-competitive Agreements 

 

An airline code sharing agreement, an alliance and a partnership or joint venture agreement (which does not amount to a merger) falls within the definition of “agreement” for the purposes of the Malaysian Aviation Commission Act 2015 (“MAVCOM Act”). Horizontal agreements such as those which have the object to directly or indirectly fix price, share aviation service market or sources of supply in connection with aviation services would be deemed to have the object of significantly restricting competition. The MAVCOM will apply this legal presumption even if the parties to the agreement have very low combined market share in a relevant aviation service market. 

 

Draft guidelines on Abuse of Dominant Position 

 

A market share above 60% may indicate that an enterprise holds a dominant position in a relevant aviation service market. The MAVCOM, in evaluating whether a dominant enterprise is abusing its dominant position, will consider the actual or likely adverse effects of the conduct. A conduct of a dominant enterprise would not amount to abuse of dominant position if the conduct has reasonable commercial justification or represents a reasonable commercial response to the market entry or market conduct by a competitor. The onus is on the dominant enterprise to establish the same. 

 

Draft guidelines on Aviation Service Market Definition

 

The MAVCOM will adopt the Hypothetical Monopolist Test (“HMT”) comprising two elements —the service market and the geographic market.  For the purpose of defining and identifying a service and geographic market, the “Demand-side substitution” and the “Supply-Side substitution” analysis may be considered.
 
There are various other factors which should be considered in ascertaining the relevant aviation service market and the market share of the respective parties. This includes switching costs, brand loyalty, neighbouring airport, timing (peak/off peak hours).

 

 

For further information, please contact:

 

K Shanti Mogan, Partner, Shearn Delamore & Co​

shanti@shearndelamore.com