Hong Kong Competition Commission has decided to close the investigation into a proposed business agreement between Hong Kong's flagship carrier Cathay Pacific and Malaysia Airlines after the two airlines scrapped the idea.
According to its official statement, the competition watchdog said on Thursday that it had ended its probe after both airlines had decided not to proceed with the plan to share revenue and costs, on a given route regardless of which airline is operating the actual flight. The proposed agreement would also have involved joint sales and marketing.
Rasul Butt, chief executive officer of the commission, said, “Under the ordinance, undertakings may choose to apply to the commission for a decision as to whether or not an agreement or conduct is excluded or exempt from the Conduct Rules. Undertakings are also entitled to conduct a self-assessment of the legality of their agreement or conduct."
He added that the commission will initiate an investigation into any agreement or conduct if there is reasonable cause to suspect that a contravention of a competition rule has taken place, is taking place or is about to take place.
The proposed agreement first came to light in May 2022, when both airlines jointly made an application to the Malaysian Aviation Commission to exempt the proposed agreement from the country’s competition law. As such, the competition watchdog initiated an investigation to assess whether the proposed partnership would potentially harm competition in Hong Kong.
The commission’s preliminary assessment during the investigation indicated that the markets for air passenger services between Hong Kong and Malaysia are highly concentrated, with both airlines having significant market shares and being each other's closest competitor.
The commission said that implementing the proposed agreement would likely eliminate all competition between both companies as they would effectively operate as a single entity on the routes in question.
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