Singapore Airlines 2011 Annual Report Download - page 167

ANNUAL REPORT 2010/2011 165
NOTES TO THE FINANCIAL STATEMENTS
31 March 2011
36 Contingent Liabilities (in $ million) (continued)
(b) Cargo: Investigations by Competition Authorities and Civil Class Actions (continued)
On 8 February 2011, SIA Cargo confirmed its acceptance of a plea bargain offered by the United States
Department of Justice. This amount has been reflected as exceptional items in the Group’s accounts.
The plea agreement has brought the Department of Justice’s air cargo investigations in the United
States to a close for SIA Cargo.
On 30 November 2010, the Korea Fair Trade Commission (“KFTC”) released its adverse decision
against 21 air cargo carriers, including SIA Cargo, in respect of fuel surcharges. A fine of
KRW3.117 billion ($3.6 million) was imposed on SIA Cargo. The fine was paid in January 2011 in
accordance with Korean laws. This amount has been reflected as an exceptional item in the Group’s accounts.
SIA Cargo contests the validity of the KFTC decision and has filed an appeal before the Seoul District Court.
On 9 November 2010, the European Commission issued an adverse decision against 13 air cargo
carriers, including SIA Cargo and the Company, in respect of fuel surcharges, security surcharges and
commissions on surcharges. A fine of EUR74.8 million ($135.7 million) was imposed on SIA Cargo and
the Company. SIA Cargo paid the fine in February 2011 in accordance with European Union laws. This
amount has also been reflected as an exceptional item in the Group’s accounts. SIA Cargo and the
Company have filed an appeal to the European General Court seeking annulment of the decision.
In July 2010, SIA Cargo was among eight airlines to receive notification that the Competition
Commission of South Africa had referred a complaint to the South Africa Competition Tribunal in
respect of fuel surcharges. These proceedings have not progressed since the initial issuance of the
complaint. SIA Cargo intends to defend this proceeding.
In December 2008, the competition authorities in New Zealand and Australia initiated civil penalty
proceedings concerning the air cargo issues. In New Zealand, a statement of claim was issued against
14 airlines including both SIA Cargo and the Company. In Australia, statements of claim have been
issued against nine airlines including SIA Cargo. These proceedings remain at a preliminary stage.
An initial defence has been filed in both proceedings.
After the investigations commenced, civil damage lawsuits were filed in the US, Canada, Australia,
South Korea, England and the Netherlands by private parties against several airlines, including SIA
Cargo and the Company. Other lawsuits have been threatened by customers of SIA Cargo or shippers
that purportedly contracted with SIA Cargo’s customers. The filed cases still remain in their respective
procedural stages and none have been tried thus far on their respective substantive legal merits.
Apart from the exceptional items noted above, it is premature to make provision in the financial
statements for the other pending investigations, court proceedings, civil suits, or threatened claims.