34 Commitments and contingencies continued
Ahold
Annual Report 2010
Group at a glance
Performance
Governance
Financials
Notes to the consolidated financial statements continued
Other contingent liabilities
ICA tax claims
In 2007, the Swedish Tax Agency disallowed interest deductions by ICA Finans AB of SEK 1,795 million (€199 million) for the period
2001-2003. ICA appealed the decision to the County Administrative Court, which in December 2008 ruled in favor of the Tax Agency. ICA
appealed the County Administrative Court's decision to the Administrative Court of Appeal, which in June 2010 published its ruling in favor
of the Tax Agency. ICA has reported a tax charge of SEK 747 million (€78 million) in 2010 in accordance with the decision of the
Administrative Court of Appeal. ICA has filed an appeal and request for leave to appeal to the Supreme Administrative Court on June 29,
2010 and the corresponding motivation on August 27, 2010.
In a separate case, the Swedish Tax Agency has decided to disallow interest deductions to a Dutch ICA Group company in 2004-2008. In
December 2010, the County Administrative Court affirmed the Tax Agency's ruling and denied interest deductions of SEK 3,358 million
(€373 million). The tax claim amounts to SEK 1,187 million (€132 million), including penalties and interest. ICA is convinced that the
deductions complied with applicable tax laws. This assessment is shared by outside counsel, which has analyzed the Tax Agency's
argument and the legal principles applied by the court. ICA has appealed the County Administrative Court's decision to the Administrative
Court of Appeal. The Tax Agency has denied ICA's request to defer payment, due to which SEK 1,187 million (€132 million) was paid in
January 2011. The amount paid has been booked as a receivable from the Tax Agency.
Legal proceedings
Ahold and certain of its subsidiaries are involved in a number of legal proceedings, which include litigation as a result of divestments, tax,
employment, and other litigation and inquiries. The legal proceedings discussed below, whether pending, threatened or unasserted, if
decided adversely or settled, may result in liability material to Ahold's financial condition, results of operations, or cash flows. Ahold may
enter into discussions regarding settlement of these and other proceedings, and may enter into settlement agreements, if it believes
settlement is in the best interests of Ahold's shareholders. In accordance with IAS 37 "Provisions, Contingent Liabilities, and Contingent
Assets," Ahold has recognized provisions with respect to these proceedings, where appropriate, which are reflected on its balance sheet.
U.S. Foodservice - Waterbury litigation
In October 2006, a putative class action was filed against U.S. Foodservice by Waterbury Hospital and Cason, Inc. and Frankie's
Franchise Systems Inc. with the United States District Court for the District of Connecticut in relation to certain U.S. Foodservice pricing
practices (the Waterbury Litigation). Two additional putative class actions were filed in 2007 by customers of U.S. Foodservice, Catholic
Healthcare West, and Thomas King, Inc., in the U.S. District Courts for the Northern District of California and the Southern District of
Illinois, respectively. These two new actions involved the same pricing practices as those in the Waterbury Litigation. The new actions also
named Ahold and two individuals as defendants. In accordance with the decision of the Judicial Panel on Multidistrict Litigation, in 2008,
the actions were consolidated with the Waterbury litigation before the Court in Connecticut. Ahold was (among other parties) named as
defendant. Both Ahold and U.S. Foodservice filed a motion to dismiss against the complaint. In December 2009, the Court in Connecticut
granted Ahold's motion to dismiss, as a result of which Ahold is no longer party in the proceedings. U.S. Foodservice's motion to dismiss
was partially rejected by the Court, as a result of which U.S. Foodservice remains defendant in the ongoing proceedings. Ahold cannot at
this time provide a reasonable estimate of any of its potential liability in connection with the indemnification obligation mentioned in the
table above.
U.S. Foodservice - Governmental regulatory investigations
The Civil Division of the U.S. Department of Justice was conducting an investigation, which related to certain past pricing practices of
U.S. Foodservice for sales made to the U.S. government prior to the date of completion of the disposal of U.S. Foodservice (July 3, 2007).
In September 2010, a settlement was reached with the Department of Justice under which U.S. Foodservice was obliged to pay an
amount of $33 million (€24 million) to the U.S. government. Ahold paid under its indemnification agreement with U.S. Foodservice an
amount of $23 million (€17 million), of which $12 million (€8 million) had already been provided for in 2009. Ahold cannot exclude the
possibility of further indemnification obligations resulting from other governmental or regulatory actions.
Uruguayan litigation
Ahold, together with Disco S.A. (Disco) and Disco Ahold International Holdings N.V. (DAIH), is a party to certain legal proceedings in
Uruguay related to Ahold's 2002 acquisition of Velox Retail Holdings' shares in the capital of DAIH.
The proceedings are ongoing. The damages alleged by the plaintiffs, alleged creditors of certain Uruguayan and other banks, amount to
approximately $70 million (€52 million) plus interest and costs. As part of the sale of Disco to Cencosud in 2004, Ahold has indemnified
Cencosud and Disco against the outcome of these legal proceedings. Ahold continues to believe that these legal proceedings are without
merit and will continue to vigorously oppose the plaintiffs' claims.
