Safeway has dismissed claims its petrol discounts amounted to unfair trading.
The multiple launched a promotion at the start of June offering till slip vouchers on every basket over £25. Customers can save up to 20p off a litre of petrol at its 180 forecourts if they spend £150 or more at any Safeway store.
The Petrol Retailers Association asked the OFT to investigate what it claimed amounted to Safeway dispensing free petrol.
The PRA argued such pricing strategies could drive traditional forecourt operators out of business.
But the OFT refused to launch an investigation because Safeway was not a major force in the petrol forecourt industry and its discount was not intended to be permanent.
Safeway communications director Kevin Hawkins said: "The fact that the OFT is not pursuing this does not surprise me. There is nothing in UK competition law which prohibits below cost selling either as part of a promotion or as a longer term strategy.
"Our petrol sales have been in double figures since we started the deal."

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