Will a takeover see prices cut?

Representatives from the supermarket chains Asda, Morrisons, Sainsbury and Tesco all presented their plans for the chain to the Competition Commission.

The commission is looking into whether any of the proposed deals would create an excessively dominant supermarket group which could harm shoppers and suppliers.

The National Farmers Union told the commission it was worried at the prospect of the sector being dominated by two main firms.

Cheaper food?

Tesco chief executive Terry Leahy said the firm believed its acquisition of Safeway would create 5,000 jobs and that prices would fall by about 11% on a broad range of products in Safeway stores.

If the further concentration of food retail power continues and competition is reduced, the effect on farmers could be catastrophic Robin Tapper, NFU

The pledge of lower prices was also put forward by Asda's chief executive Tony de Nunzio.

Sir Ken Morrison said his supermarket group fitted well with Safeway without harming local competition.

"To this day we are loyal to our founding principle of low prices for everyone," he said.

"If we get Safeway we will take on the big three."

'Catastrophe' for farmers

Sainsbury chief executive Sir Peter Davis warned of the dangers of letting the top two UK supermarket chains - Tesco and Asda - increase their domination.

"We believe that if either Asda or Tesco were to acquire Safeway, then the resulting duopoly would be bad for both customers and suppliers," he said.

The National Farmers' Union echoed these concerns in its submission.

"The National Farmers' Union would be gravely concerned if any deal resulted in the UK food retail market being further dominated by two main companies," said the union's head of marketing, Robin Tapper.

"A situation where two companies account for 50% of the retail food market would not be in (consumers' or farmers') interest.

"If the further concentration of food retail power continues and competition is reduced, the effect on farmers could be catastrophic."

Supermarket scrap

The battle for Safeway was triggered when Morrisons launched a bid for the chain in January.

Tesco, Sainsbury and Wal-Mart-owned Asda all quickly expressed their interest in bidding for Safeway.

Last month, Trade & Industry Secretary Patricia Hewitt referred the four supermarket groups to the Competition Commission.

The fifth prospective offer, from an investment vehicle controlled by entrepreneur Philip Green, escaped the commission's scrutiny.

Mr Green owns chain store BHS and several other High Street fashion chains but has no food stores.