An American court has approved Ahold's settlement proposal to the customers of its former subsidiary US Foodservice for charging too much.
Ahold artificially increased its prices
US Foodservice focused on restaurant, hotel and hospital deliveries and got paid based on the sales price, with obviously a profit margin. That purchase price was however raised artificially between 1998 and 2005, as the company used intermediary companies to buy its products and those companies then sold them back at inflated prices.
When the news leaked, some 75,000 people joined a group action against Ahold. The Dutch company then agreed to a 297 million dollar (nearly 240 million euro) settlement which it already implemented into its first quarter accounting, worth 215 million euro. A court has now approved that settlement.
Investor complaint against US Foodservices
US Foodservices's inventive accounting practices, which helped artificially boost profits between 1999 and 2003, also resulted in a clash with investors. Ahold also settled that case with a 1.1 billion dollar payment.
Ahold has already sold off its subsidiary for 7.1 billion dollars to a group of investment funds (containing Clayton, Dubilier & Rice and Kohlberg Kravis Roberts) which has renamed it US Foods.