Kuala Lumpur, Sep 6 (IANS): Malaysian authorities Friday levied fines on the country's flag carrier Malaysia Airlines and the region's leading budget carrier AirAsia for anti-competitive conduct during a failed tie-up deal.

The Malaysia Competition Commission fined the two airlines $3.01 million each as it found the collaboration deal had distorted the domestic aviation service, reports Xinhua.

"When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers," Siti Norma Yaakob, chairman of the commission, said in a statement.

Malaysian Airlines and AirAsia entered a share-swap agreement in August 2011 which saw Khazanah Nasional, Malaysia's state investment arm, handing over 20.5 percent stake in the national carrier for 10 percent shares in AirAsia.

The deal was dropped eight months later after facing fierce opposition from Malaysian Airlines' influential employees union, which feared it could result in possible job losses and other cost-cutting at the national carrier.

The two airlines have 30 days to respond to the commission's decision.