Malaysian authorities on Friday fined its 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 (MyCC) fined the two airlines 10 million ringgit (3.01 million U.S. dollars) each as it found the collaboration deal had distorted the domestic aviation service. "When businesses agree to share markets, they are agreeing to stop competing at the expense of the consumers,"Chairman Siti Norma Yaakob said in a statement.

Malaysia Airlines and AirAsia entered a share swap agreement in August 2011 which saw Khazanah Nasional, Malaysia's state investment arm, handed 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 Malaysia Airlines influential employee union, who were disgruntled for the competition from AirAsia and for fear of potential job cut.

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