The decision by Merrill Lynch & Co this week to settle a dispute with the pension fund of British supermarket chain J Sainsbury's may not be the last battle the firm has to fight.

The undisclosed deal is the second that Merrill has inked with disgruntled clients of Mercury Asset Management, the British fund manager it bought in 1997, whose funds underperformed the market in the late 1990s.

In December last year it paid the pension fund of soap-to-ice cream giant Unilever a sum reported to be around £75 million sterling (€120 million) in an out-of-court settlement, although it did not admit liability.

Unilever claimed Mercury had ignored tight risk guidelines in its mandate, leading the fund's investment returns to lag the market badly.

Following the Unilever case, the British pension funds of drugs firm AstraZeneca, the Co-operative Society and Surrey County Council said they were mulling legal action against Merrill.

Yesterday, AstraZeneca spokesman Mr Steve Brown said the £2 billion fund had "been taking legal advice but the pension fund trustees have yet to make a decision".

A spokesman for the Co-op also declined to be drawn saying the fund was "still considering our options".

In May the Co-op fund said it was dumping Merrill as manager of part of its £2.1 billion fund and was considering legal action over Merrill's historic investment performance.

Surrey County Council declined to comment.

Analysts played down the chance of more pay-outs. "There are going to be some people who will want to have a go, but I doubt whether there are many people that had a significant case," said one analyst, who declined to be named.

In a statement, Merrill Lynch said: "We do not believe there are grounds for any other claims, but if one does emerge we will vigorously contest it."

On Monday Merrill said it had reached an agreement with Sainsbury's pension fund without admitting liability. - (Reuters)