Cutthroat competition reaches new low as store saboteurs target rivals

Dirty tricks are breaking out in British supermarket chains as competition boils over with the arrival of Wal-Mart, the giant American retailer.

Dirty tricks are breaking out in British supermarket chains as competition boils over with the arrival of Wal-Mart, the giant American retailer.

A leaked internal memo from Safeway reveals that staff are being encouraged to give rivals "a punch on the nose". Tactics include teams of employees pretending to be customers at other supermarkets, clogging up checkouts and causing long queues.

Aggressive leafleting of rivals' carparks is another gambit, partly aimed at causing stock shortages by forcing the supermarket to match lower prices elsewhere. When Tesco claimed its frozen food prices were cheaper than Iceland's, the company retaliated by placing stickers on certain items in Tesco stores, saying: "Psst, I'm cheaper at Iceland."

The Safeway document contains advice from operations director John Douglas, telling staff: "Be one jump ahead. Make sure you know what they're up to and cause as much confusion as you possibly can."

Safeway, smallest of the Big Four supermarket chains, sees its main rival as Asda, which launched aggressive price-cutting campaigns since its takeover by Wal-Mart and promised to match competitors' prices.

The memo hails an operation by the Safeway manager at Castle Bromwich, West Midlands, who sent 10 employees to an Asda store. They arrived at the checkouts simultaneously, then pulled out Safeway sales leaflets and demanded to pay the prices they showed.

"The queues on other tills were about 45ft long and customers were dumping baskets and leaving," the manager reported. "One customer was given his frozen food for nothing because he waited so long."

On other occasions, supermarket staff have recognised their rivals, welcomed them over the public address system and opened a special checkout for them to avoid inconveniencing other customers. In Glasgow, the Safeway contingent refused to use the designated till, and were told over the loudspeakers to leave.

A Safeway spokesman was unapologetic. "We have given local store managers the go-ahead to exploit any local opportunities to test the competition," he said. "Some of our managers have decided to target Asda's price pledge by testing it. If Asda are going to make these claims, we think it's perfectly reasonable to put them to the test."

An Asda spokeswoman, Zaria Pinchback, said; "We think it's amusing. We've never gone into other stores with the intention of causing havoc."

She agreed Asda has "campaigned outside rivals' stores", and added: "That will have happened. It's a very competitive market, and that can only be good for customers."

Dirty business tricks are not unknown. British Airways had to apologise to Sir Richard Branson and pay £3.6m in a libel settlement and legal fees after admitting "regrettable" behaviour by BA staff against Mr Branson's Virgin airline.

Sir Richard claims these included hacking into Virgin's reservations computer, posing as Virgin staff to poach passengers, approaching passengers and offering them inducements to switch to BA flights and shredding documents on these activities.

That was 10 years and several BA chief executives ago. In June, Sir Richard took tea with the latest, Rod Eddington, to symbolise more civilised relations between the airlines, but only two weeks later he was alleging more dirty tricks from an unknown quarter, this time over Virgin's new services to Delhi. The campaign, he said, included theft of documents, corruption against Virgin and high-level lobbying to block the airline's entry on the route.

Sir Richard is also a player in the cola market, where Coca-Cola and Pepsi have slugged it out across the world for decades. Last year European Commission inspectors raided Coca-Cola offices in London and Europe, investigating claims by Pepsi and Virgin that Coke had used its market dominance to force retailers to stock its product over those of its rivals.

Scoot.com, the internet directory service, has also called in private detectives to track the source of an anonymous and highly critical dossier in the City, claiming Scoot had overstated subscriber numbers. A disgruntled former employer or US investor is suspected.