34 Commitments and contingencies (continued)
Ahold Annual Report 2012 139
Ahold at a glance
Our strategy
Our performance
Governance
Financials
Investors
Notes to the consolidated
financial statements
Legal proceedings
Ahold and certain of its former or current 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 U.S. District Court in Connecticut. Ahold was (among other parties)
named as defendant. In July 2009, the Plaintiffs filed a motion to certify a Plaintiff class in the action. Both Ahold and U.S. Foodservice filed a motion to dismiss against the complaint and also
filed motions opposing the certification of a class in the action. 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. On
November 30, 2011, the U.S. District Court granted the Plaintiffs' motion to certify a class in the action which, if not reversed during the proceedings, would increase the potential liability
exposure. The Court certified a class consisting of any person in the United States who purchased products from U.S. Foodservice pursuant to an arrangement that defined a sale price in
terms of a cost component plus a markup ("cost-plus contract"), and for which U.S. Foodservice used a so-called "Value Added Service Provider" or "VASP" transaction to calculate the cost
component. On December 14, 201 1U.S. Foodservice filed a petition with the Second Circuit Court of Appeals seeking permission to appeal the class certification order and that petition was
granted on April 3, 2012. U.S. Foodservice's appeal of the class certification order is now pending. Parties are currently conducting discovery pursuant to a joint scheduling order entered by
the Court on January 10, 2013. The trial is currently scheduled to begin on February 3, 2014. 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. Ahold will continue to vigorously defend its interests in these proceedings.
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 divestment 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 (€9 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 and Disco Ahold International Holdings N.V. (DAIH), is a party to or bears the risk of three legal proceedings in Uruguay related to Ahold's 2002 acquisition of
Velox Retail Holdings' shares in the capital of DAIH. The damages alleged by the plaintiffs, alleged creditors of certain Uruguayan and other banks, amount to approximately $70 million
(€53 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. The
proceedings are ongoing. Ahold continues to believe that the plaintiffs' claims are without merit and will continue to vigorously oppose such claims.
