Tesco, Asda hit by allegations that they threatened suppliers

Tesco lashed out at the Competition Commission after details of a new line of inquiry in the watchdog's investigation of the industry were leaked to the media at the weekend.

The commission is understood to have issued documents demanding access to millions of emails sent by Tesco and its rival Asda to suppliers in the run-up to the summer price war between it and other supermarket groups. The watchdog is looking for evidence that they threatened suppliers into granting them deep discounts that they could then use to undercut rivals.

Tesco said: "It is extraordinary to see the Competition Commission putting these prejudicial allegations into the media in this way.The allegation that threatening and aggressive emails have been sent, has not been mentioned to us, despite numerous conversations with the Competition Commission on this matter." The commission made the so-called Section 109 demands, essentially subpoenas, for the emails after being tipped off by a supplier.

Asda said it has "absolutely nothing to hide". An Asda spokeswoman said the company, owned by Wal-Mart, the world's largest retailer, was "fully cooperating" with the commission. She added: "We take our responsibilities as a major partner of a number of our suppliers very seriously. They are as important to us as we are to them. We absolutely observe the code of conduct."

Specifically, the watchdog is understood to be seeking clarification as to whether Tesco and Asda used threatening language to convince suppliers to grant better terms on goods or face elimination of their relationships with the giant retailers.

The Competition Commission opened its inquiry into whether the supermarket sector's top four companies--Tesco, Asda, J Sainsbury and Morrison's--abused their dominant positions in the market in May. It is understood that the shift in focus to the summer price war, which contributed to a sharp decrease in inflation, represents a new direction in the investigation.

Previous inquires have failed to find wrongdoing by the supermarket giants. But the use of threats against suppliers could give ammunition to the commission, which expects to publish preliminary findings next month.