Cathay Pacific 2013 Annual Report Download - page 45

Cathay Pacific Airways Limited Interim Report 2013 43
Condensed Financial Statements
Notes to the Accounts
22. Commitments and contingencies (continued)
(e) Cathay Pacific remains the subject of antitrust proceedings in various jurisdictions and continues to
defend itself vigorously. The proceedings are focused on issues relating to pricing and competition.
The Company is represented by legal counsel in connection with these matters.
In 2006 the Competition Bureau of Canada (the “Bureau”) commenced a non-public investigation of
the Company’s air cargo operations. On 20th June 2013, pursuant to a plea agreement entered into
by the Company and the Bureau, the Ontario Superior Court of Justice accepted the Company’s
plea of guilty with respect to certain violations of the Canadian Competition Act relating to a
NavCan surcharge. Pursuant to the plea agreement and the Court’s judgment, the Company agreed
to pay a fine of CAD$1.5 million (approximately HK$11.21 million at the exchange rate current when
the judgment was entered). Cathay Pacific has satisfied the judgment.
In December 2008, the Company received a Statement of Claim, since amended, from the New
Zealand Commerce Commission (“NZCC”) with regard to Cathay Pacific’s air cargo operations.
Agreement has been reached between Cathay Pacific and the NZCC to settle the allegations which
arose out of the amended statement of claim. Under the settlement, which has been approved
by the High Court of New Zealand, Cathay Pacific has pleaded guilty to certain violations of the
Commerce Act 1986 and agreed to make a payment of NZ$4.56 million (approximately HK$29.95
million at the April 2013 exchange rate), made up of a penalty of NZ$4.30 million and a contribution
of NZ$0.26 million to the legal costs of the NZCC. Cathay Pacific has satisfied the judgment.
In November 2010, the European Commission issued a decision in its airfreight investigation finding
that, amongst other things, the Company and a number of other international cargo carriers agreed to
cargo surcharge levels and that such agreements infringed European competition law. The European
Commission imposed a fine of Euros 57,120,000 (equivalent to HK$618 million at the exchange rate
current as of the date of the announcement) on the Company. In January 2011, the Company filed an
appeal with the General Court of the European Union. The appeal is currently pending.
The Company has been named as a defendant in a number of civil complaints, including class
litigation and third party contribution claims, in a number of countries including the United States,
Canada, the United Kingdom, the Netherlands and Australia alleging violations of applicable
competition laws arising from the Company’s conduct relating to its air cargo operations. In
addition, civil class action claims have been filed in the United States and Canada alleging violations
of applicable competition laws arising from the Company’s conduct relating to certain of its
passenger operations. The Company is represented by legal counsel and is defending these actions.
The proceedings and civil actions, except as otherwise stated above, are ongoing and the outcomes
are subject to uncertainties. Cathay Pacific is not in a position to assess the full potential liabilities
but makes provisions based on facts and circumstances in line with the accounting policy 20 set out
on page 97 in the 2012 Annual Report.