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Air Canada receives statement of objections from European Commission

Dec. 27, 2007, Montreal, Que. – Air Canada says it is among a
handful of international airlines to have received a statement of
objections from the European Commission related to an investigation
into alleged anti-competitive cargo pricing activities.

The Montreal-based major airline said the letter outlines a
preliminary EC assessment in the investigation that considered,
among other things, the levying of fuel surcharges in breach of
antitrust laws.

The airline said the EC has not conducted any investigations at
its premises and it has voluntarily co-operated “and will continue
to do so.''

“Air Canada is studying the statement of objections and will
respond in writing in accordance with normal procedure,'' the
company said in a statement.

“It is Air Canada's policy to conduct its business in full
compliance with all applicable laws in all of the jurisdictions in
which it does business, including all applicable competition or
antitrust laws.''

Cathay Pacific Airways Ltd. also said it has received a formal
letter of complaint from regulators.

The EC, alongside United States authorities, have been
investigating more than a dozen airlines since at least early 2006
to discover if there was collusion in the air cargo industry to fix
prices on surcharges for fuel, security and insurance.

The European Commission said Friday it had sent out a “statement
of objections'' to a number of airlines, but did not name them.

British Airways, Air France-KLM and Scandinavian airline operator
SAS Group later confirmed they had each received a letter.

Cathay said it was reviewing the letter with its legal counsel
and would make a “timely response'' to the objections.

“It is a lengthy and complex document, and only sets out the
(regulator's) preliminary findings resulting from its investigation
into to the air cargo sector of the aviation industry. The
investigation involves many other airlines,'' the Hong Kong-based
carrier said in a statement.

It did not say what the objections were, but emphasized that they
were confined to air cargo operations and did not involve the
company's passenger business.

“Cathay Pacific has always supported fair competition, and
remains committed to compliance to all applicable competition laws
in the 35 countries and territories in which it operates,'' the
statement said.

Under EU law, the commission can fine companies accused of
operating a cartel as much as 10 per cent of their annual sales.
Price-fixing, if proven, could also bring fines and other penalties
in the United States.