Tesco steps up war of words with 'Guardian'

Attempts by The Guardian to apologise in its libel battle with Tesco have backfired, with the supermarket's lawyers branding follow-up articles on the company's tax structures as "false, misleading, unfair, disingenuous and downright dishonest".

The row blew up last month when Tesco launched legal proceedings for libel and malicious falsehood following reports that it had created offshore joint venture partnerships to avoid up to £1bn of corporation tax on the sale of UK properties and also dodged the corporation tax on £500m of profits from two earlier deals. Tesco claims the reports are untrue and it has repeatedly told the paper so.

The Guardian did run an apology and clarification, on the May Bank Holiday, admitting the reports about corporation tax were incorrect. "We are happy to correct the record and apologise to Tesco," it said. But Tesco claims the newspaper has actually compounded the damage rather than helping. Not only was the apology only printed on page 38, say the supermarket's lawyers, but the newspaper also ran both a leader article, and much larger pieces on pages 22 and 23, pointing the finger at the company's avoidance of stamp duty land tax instead.

"Your clients are now peddling to their readers what can only be described as a lie," says a letter sent yesterday from Carter Ruck, Tesco's lawyers, to Olswang, acting on behalf of The Guardian. "All your clients have succeeded in doing is demonstrating the contempt in which they hold, not just Tesco, but their readers and indeed the truth itself," it goes on to say.

A spokesman for The Guardian yesterday said: "We are surprised that Tesco should write in these terms and treat a legal letter like a press release since they well know our defence is due on Friday. We remain bewildered by the tactics of one of Britain's largest companies."

In the leader alongside the clarification pieces, The Guardian claimed its motivation was to explain the purpose and benefit of Tesco's offshore arrangements. "Since Tesco has alleged that The Guardian set out deliberately to print a misleading story, we also detail the background to the articles, including the steps to which we went in order to clarify our understanding of the complicated company structures Tesco had created," The Guardian said. "We remain ready to defend our journalism – in court, if necessary."