Costcutter and Palmer & Harvey are “confident” their tie-up will receive the all-clear, despite being probed by the Office of Fair Trading.

The watchdog revealed this week it was investigating whether P&H’s agreement to licence Mace, Your Store and Supershop to Costcutter in perpetuity could lessen competition.

But Costcutter CEO Darcy Willson-Rymer said: “The impact on market competition was part of our considerations when completing the deal with P&H and we are confident the OFT, and should it prove necessary, the Competition Commission, will agree with our position.”

P&H approached the OFT for advice in 2010 before setting up a buying alliance with Makro. When the Costcutter deal was announced in March, a senior P&H source said the advice it had taken over Palmak was crucial. “If rivals want to investigate, they are welcome to, but they may find their own arrangements under greater scrutiny as a result,” he added.

The probe comes days after Booker’s acquisition of Makro received final clearance from competition authorities.