Five companies are hoping to buy Safeway

Four possible bids for Britain's fourth-largest supermarket chain were referred to the Competition Commission amid fears they could potentially undermine competition in the sector.

Tesco, Sainsbury and Wal-Mart owned Asda were told on Monday that they could be blocked from bidding, or forced to offload some stores.

However, the Commission said that Morrisons' bid could be good for competition, because it would maintain four supermarkets operating on a national scale.

The Commission said it had as yet reached no conclusions on any matter and said further evidence was needed before a final ruling.

Supermarket battle

The fifth prospective offer, from an investment vehicle controlled by entrepreneur Philip Green, will not face the commission's scrutiny, as while he owns chain store BHS and several other High Street fashion chains he has no food stores.

Tesco Chief Executive, Sir Terry Leahy, said: 'We note that no final decisions have yet been made by the Commission, who are due to report their findings to the Secretary of State on 12 August 2003.

'We welcome the opportunity to comment on the issues and possible remedies before the Commission reaches its conclusions about the proposed bids."

The battle for Safeway was sparked in January when Morrisons boss Sir Ken Morrison launched a bid for the UK's fourth-biggest supermarket group.

Since then three rival operators have weighed in to the fight.

At an open meeting held by the Competition Commission last month, the four supermarket bidders said their bids, if successful, would lead to lower prices and new jobs.

But farmers' groups and representatives of smaller retailers protested that a takeover by any of the larger supermarket groups would lead to excessive concentration of power in the retail sector.

The Competition Commission is not expected to reach a final decision until August.