Food prices could fall some 10% over the next few years in the wake of Morrisons’ clearance to bid for Safeway.

The Observer said the break-up of Safeway would be good for consumers and lead to more competition among supermarkets. To offset falling food margins, supermarkets will have to grow non-food sales even more strongly, which would be bad news for retailers such as Woolworths and WH Smith.

The paper added that Philip Green and venture capitalists would cast their eyes over Sainsbury now the chain has been blocked from bidding for Safeway.

The Sunday Times said Morrisons needed to offer £3.5bn of shares and cash if it is to win over Safeway shareholders.

Wal-Mart is concerned that the decision to block its bid for Safeway was made on political ground, instead of an analysis of the supermarket sector or customer interests. The Business said Wal-Mart was considering an appeal against the decision.

Meanwhile, The Mail on Sunday reported that Asda has ruled out a legal challenge to the decision to block its bid for Safeway. An Asda source said: "Legal action goes against the culture of being the consumer’s friend and champion."