Malaysia: Asia Pacific Competition Highlights, Q3 2021

In brief

  • MAVCOM issues Malaysia's first merger clearance decision 

The aviation regulator also took into account the failing firm defence for the first time in approving the proposed merger between Korean Air and Asiana Airlines. 


This update was published in October 2021, as part of our quarterly newsletter, Asia Pacific Competition Highlights. Click here to access the full report, which covers the most notable antitrust developments across 11 Asia Pacific jurisdictions. 

MAVCOM issues Malaysia's first merger clearance decision 

The Malaysian Aviation Commission ("MAVCOM") took into account the failing firm defence for the first in approving the proposed merger between Korean Air and Asiana Airlines ("Anticipated Merger"), and issued its final decision on 9 September 2021. The Malaysian competition law does not apply to commercial activity relating to the local civil aviation industry, which is regulated under the Malaysian Aviation Commission Act. 

The Anticipated Merger was submitted by Korean Air pursuant to a voluntary notification and application under the Malaysian Aviation Commission Act 2015. In its assessment, MAVCOM focused on potential anti-competition effects of the Anticipated Merger on a direct flight route between Kota Kinabalu and Seoul, which are served by both parties ("Overlapping Route"). 

MAVCOM approved the Anticipated Merger for reasons including: 

  • the Anticipated Merger would not cause a significant lessening of competition effect on the flight routes in which the parties do not overlap;
  • while the parties' post-merger market share of the Overlapping Route would be above 65% - 75%, the Anticipated Merger would cause limited unilateral effects as (i) airfares are strictly controlled by the South Korean authorities, (ii) Malaysian passengers have alternative flight options (to the Overlapping Route), (iii) the Overlapping Route has low passenger traffic, and (iv) the civil aviation industry is highly competitive; and 
  • Asiana Airlines is in such a dire financial situation that it is likely to exit the relevant aviation service market within the near future (i.e., the "failing firm defence"). 
Contact Information

Copyright © 2024 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.