Safeway has been accused of 'cynical cross-subsidisation' for its promise to slash as much as 20p-per-litre off its fuel for customers spending £150 in one of its stores.

Ray Holloway, director of the Petrol Retailers Association, has written to the Competition Commission to look at the supermarket's promotion which through a series of vouchers would enable its customers to buy fuel at 5p per litre below cost price.

In his letter Holloway wants the Competition Commission and the Office of Fair Trading to establish whether supermarkets such as Safeway, Sainsbury and Tesco have established unfair practice by offsetting grocery profits to undercut the general petrol market.

Speaking on BBC's Today programme Safeway's communications director Kevin Hawkins said: 'We do not believe that the promotion is unfair. The PRA know that as fuel is perceived as expensive and this offer is another way in which Safeway can bring value for money to its customers.'

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