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Ahold has agreed in principle to settle a class action pending in the U.S. District Court for the District of Connecticut regarding the pricing practices of the retail conglomerate's former subsidiary U.S. Foodservice, during the years 1998-2005.
Under the agreement, Amsterdam-based Ahold will make a payment of $297 million into a settlement fund in return for a release from all claims from all participating class members. According to the company, the money will come out of its available cash balances, and it expects to make the payment in late 2014 or the beginning of 2015.
Ahold indemnified U.S. Foodservice against damages arising out of the class action, as part of the terms of its sale of the subsidiary in July 2007 to a consortium of the private equity firms Clayton, Dubilier & Rice and Kohlberg, Kravis Roberts & Co. for $7.1 billion.
The class comprises any person in the United States who bought products from U.S. Foodservice according to an arrangement defining a sale price in terms of a cost component plus a markup, and for which U.S. Foodservice used a "value-added service provider" transaction to calculate the cost component.
The settlement is subject to approval by the court, which is expected to take up the issue in late 2014 or early 2015, and to potential reduction and/or termination based on the compensable sales volume attributable to class members who choose to opt out of the settlement. Upon becoming unconditional, the settlement will definitively resolve Ahold’s potential liability.
"The settlement permits us to avoid more lengthy, time-consuming and costly litigation, and to focus our resources and attention to our current business," noted Lodewijk Hijmans van den Bergh, member of the Ahold management board and chief corporate governance counsel.
In the United States, Ahold operates four retail divisions: Giant-Carlisle, Giant-Landover, Stop & Shop New England, and Stop & Shop New York Metro.