Tesco is accused of using its muscle to "bully" the small firm

Proudfoot says sales at its store in Withernsea, East Yorkshire, have plunged since Tesco sent 6,000 local households a 40% discount voucher.

Managing director Ian Proudfoot said: "These bully-boy tactics leave the competition no room for survival."

Tesco issued a statement saying its four-week promotion was good news for shoppers and was not anti-competitive.

Sales plummet

"This is a short-term local marketing initiative which seeks to encourage shoppers to try our store," a spokesman said.

"The promotion will come to an end next week and we have no plans to repeat it."

However, Mr Proudfoot said sales at his family's Withernsea store during the first two weeks of the Tesco promotion had fallen 37%, compared with the same period last year.

"I do believe this is predatory and it is locally focused and if they do this to lots of small catchment areas across the UK they will totally destroy the competition," he said.

Plea to chief exec

He has written to the OFT, which told him his complaint had been put "on file".

He has also written to Tesco chief executive Terry Leahy, asking if he is aware of the discount and pleading with him to step in to stop it happening again.

"Can I ask you to intervene and stop subsidising the Tesco store in Withernsea," he wrote 10 days ago.

Mr Proudfoot said he had yet to receive a reply.