International rating agency Fitch Ratings said Sainsbury would be the most likely loser in Safeway/Morrisons merger.

Sainsbury would be left as the only major full price supermarket operator, competing with three strong ‘every day low price’ chains, Tesco, Morrisons and Asda/Wal-Mart.

Tesco's ratings would be largely unaffected, as its bid was motivated by a desire to gain information on Safeway, rather than acquiring its assets, it said.

Fitch said Philip Green remained a potential acquirer. It questioned the rationale for a bid, given the economies of scale necessary in the industry, as well as likely Competition Commission interest in potential store disposals to Asda, Tesco or Sainsbury’s.

Tesco corporate affairs director, Lucy Neville-Rolfe, said the retailer hoped to pick up 24 or 25 stores in areas which did not present local competition issues.

Neville-Rolfe said she was disappointed but not surprised by the judgment, announced by DTI secretary, Patricia Hewitt.

She noted: "We bid in January because the other supermarkets had, but we knew there was a good chance that no consolidation would be allowed.

“However, it there was to be consolidation, Tesco wanted to be in a position to bid."