A major row between the retailer and its supplier erupted last year when Dunnes Stores attempted to slash the margins it paid to Whelan Frozen Foods. The latter was granted an interlocutory injunction preventing Dunnes Stores from doing so until the matter was brought to court.

Dunnes Stores also sought to terminate Whelan's contract to distribute food by the end of next February, and its contract to distribute clothing by August.

Despite the case having been settled in the High Court last week, it is believed that the relationship between the two companies may now be irreconcilable. It is understood that the distribution contracts will still be terminated early next year. That is likely to force Whelan Frozen Foods out of business with the loss of 470 jobs.

Siptu branch organiser Anne Speed said last week that she hopes the retailer will act with "conscience" in relation to Whelan's workers.

There appeared to be initial confusion over the settlement between the two parties. Legal representatives for Whelan Frozen Foods told the High Court last Friday week that an agreement had been reached between the two sides. However, the legal team for Dunnes Stores said that no settlement had been agreed. On Tuesday, both parties told the High Court that they had settled.

Last November, Dunnes Stores cut the margins it was paying Whelan's on food by an average of 7% and those for textiles by 9%.

A High Court judge directed Dunnes Stores to repay over 650,000 that it withheld when it imposed the new distribution rates, pending a full hearing of the case brought by the distributor.

Whelan Frozen Foods, which posted turnover of almost 190m and operating profits of 1.47m in the 12 months to January 2005, claimed that Dunnes Stores was using "economic duress" as a negotiating tool to obtain information about the company's accounts in order to direct the company on how to manage its business.

Its owner, Paddy Whelan, claimed in an affidavit that the cut in margins placed the company in a position where it was close to insolvency and almost "trading recklessly".