The chief executive of Ocado has accused Tesco of running scared in an increasingly bitter war of words following Ocado's claims it would price-match Tesco.
Tim Steiner told The Grocer the price-match policy appeared to have caused "angst in Cheshunt" after Tesco threatened to report Ocado to the Advertising Standards Authority.
Ocado press ads last week claimed it would sell branded products at the same price as Tesco, a claim Tesco disputed in its own newspaper advertisements, citing evidence from mysupermarket.co.uk.
"Tesco's silver bullet has always been its price, but now we are matching them. They might have won the bricks and mortar battle because they own all the land. But online is all up for grabs. It is going to grow to 20%-30% of the grocery market in the next few years and they think they are going to be the biggest player," said Steiner.
"But we have just put a big fat hole in that strategy. They picked a fight with the wrong little guy in the playground."
Steiner said Ocado altered its prices last Monday and started trading with the new prices on Wednesday.
But "although it may be coincidence" said Steiner, on Tuesday Tesco cut 83% of the prices on the 3,750 branded products Ocado had cut the day before.
"If you're going to make a claim to say you're going to price-match somebody, you do the legwork and make sure you're checking the prices and moving them up and down as necessary, but that's not what they've done so that's very disappointing for their customers," said a Tesco spokesman.
Ocado will now price check at least once a week and alter prices as necessary, said Steiner.
"This is not smoke and mirrors. We are committed to price matching Tesco. The notion we are not following them is nonsense."
Steiner also distanced himself from speculation the price cuts will cause tension between Ocado and Waitrose.
He said he was focused on "the £1bn-plus goliath of Tesco online and the £50bn a year spent at Tesco and Sainsbury's."