Singapore Airlines 2012 Annual Report Download - page 170

168 SINGAPORE AIRLINES
Notes to the Financial Statements
31 March 2012
36 Contingent Liabilities (in $ million) (continued)
(b) Cargo: Investigations by Competition Authorities and Civil Class Actions (continued)
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
exceptional items in the Group’s accounts in FY2010-11. SIA Cargo contested 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. 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. In August 2011, the New Zealand High Court issued a judgment on the first stage of the New Zealand
proceedings concerning whether the New Zealand Commerce Act applies to air cargo services coming to New Zealand
from overseas. The High Court gave an affirmative response on this issue. SIA Cargo and the Company have appealed
this decision and the New Zealand Commerce Commission has cross-appealed. The New Zealand and Australia
proceedings otherwise remain at a preliminary stage. A 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 plaintiffs in the South Korea proceedings withdrew their complaint in July 2011 and the proceedings were
accordingly dismissed without prejudice.
In June 2011, without admitting any liability, SIA Cargo and the Company reached a settlement with the plaintiffs in
Canada whereby SIA Cargo agreed to pay CAD1.05 million ($1.3 million) to resolve all liability of SIA Cargo and the
Company as concerns the civil damage lawsuits filed in Canada. This amount has been reflected as an exceptional
item in the Group’s accounts.
In addition, without admitting any liability, SIA Cargo has reached settlements with certain of its customers to resolve
all pending and potential future civil damage claims regarding the air cargo issues. The settlements have been
reflected in the Group’s accounts. The individual terms of such settlements are required to be kept confidential.