Hong Kong watchdog closes antitrust probe into proposed deal between Cathay Pacific and Malaysia Airlines after duo scrap idea
- Competition Commission announces end to investigation after learning in July that airlines had scrapped plan to share revenues, as well as coordinate pricing and flights
- Watchdog’s chief executive vows to keep an eye on air travel market as aviation industry enjoys strong rebound following end of Covid-19 pandemic
Hong Kong’s competition watchdog has closed an antitrust investigation into a proposed partnership deal between the city’s flag carrier Cathay Pacific and Malaysia Airlines after the two companies abandoned the idea.
The Competition Commission on Thursday said it had ended its investigation after learning in late July that the airlines had opted to scrap the plan to share revenue and costs, as well as coordinate pricing and schedules for flights between Hong Kong and parts of Malaysia.
The deal would also have involved joint sales and marketing.
Rasul Butt, the commission’s chief executive, vowed the watchdog would continue to keep an eye on the air travel market since it was enjoying a strong rebound after the end of the Covid-19 pandemic.
“The commission is mindful of information from public sources that the costs of travel have increased considerably post-pandemic and will be vigilant in identifying and tackling situations where anticompetitive conduct or lack of competition may be a contributing factor,” he said.
The proposed deal came to light in May of last year, when the airlines jointly made an application to the Malaysian Aviation Commission to exempt the proposed partnership agreement from the country’s competition law.
Hong Kong’s Competition Commission had expressed concerns the proposed partnership would reduce the incentives for either party to offer lower prices or improve the quality of their services.
The markets for air passenger services between Hong Kong and Malaysia were highly concentrated, with the parties having significant market shares and representing each other’s closest competitor, it said.
“Implementing the [proposal] would likely eliminate all competition between the [two airlines] as they would effectively operate as a single entity on the routes in question,” the commission on Thursday said.
“There also appears to be barriers to market entry and expansion, and the competitive constraints exerted by existing competing airlines on the [two] parties may be insufficient.”
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Cathay Pacific said the planned business collaboration with Malaysia Airlines was dropped due to “commercial considerations”.
“It should be noted that the discussions between the airlines ceased before Cathay Pacific received any definitive comments that the Hong Kong Competition Commission might have had, or the concerns mentioned in the [commission’s] announcement,” it said.
“Cathay Pacific has fully complied and cooperated with the authorities in Hong Kong and Malaysia throughout this process.”
The Post has contacted Malaysia Airlines for comment.
