KUALA LUMPUR, Sept 8 — Hong Kong’s Competition Commission (HKCC) has stopped its anti-trust investigation into a proposed partnership between its national airlines Cathay Pacific and Malaysia Airlines after the two companies abandoned the deal.

The two airlines were considering sharing revenue and costs for their Hong Kong-Kuala Lumpur and Hong Kong-Penang routes, as well as coordinate pricing and flights for various other indirect services, Hong Kong daily The South China Morning Post reported last night.

The plan came to light in May last year after the two carriers applied for an exemption from Malaysia's competition laws.

The HKCC started investigations then on suspicions that such a deal would be against Hong Kong's competition law and 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.

"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,” HKCC chief executive Rasul Butt was quoted as saying.

The HKCC ended its investigation after learning in late July that the two airlines had opted to scrap the plan, which would also have involved joint sales and marketing.

Cathay Pacific said the deal with Malaysia Airlines was dropped due to "commercial considerations”, the Hong Kong daily reported.

"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.

"Cathay Pacific has fully complied and cooperated with the authorities in Hong Kong and Malaysia throughout this process,” the Hong Kong airlines was quoted as saying.

The South China Morning Post said it had contacted Malaysia Airlines but had yet to receive a response at the time of publication.