Irish retail union Mandate is threatening to take Dunnes Stores to court over its refusal to say if the company is being sold to Asda.

The union plans to invoke industrial legislation that requires company management to inform employees on matters that directly affect them. Failure to comply, it says, can result in penalties ranging from fines of €30,000 to three years in jail.

Dunnes has refused to comment on rumours that the family-owned chain is to be taken over, with Asda tipped as the likely buyer. The speculation was heightened by reports that store managers were being called to meetings ahead of what was billed as a "significant announcement".

Almost two weeks later, however, neither the meetings nor the announcement have taken place, leaving the chain's 18,000 staff in the dark.

"What is the point of all this secrecy?" asked. Mandate assistant general secretary Gerry Light. "The company's silence is fuelling this speculation, which is affecting not just workers but the confidence of consumers and suppliers."

Ben Dunne, who ran the company until ousted by the family following a cocaine scandal, was equally critical. "Keeping staff, suppliers and customers in the dark is something that was done 100 years ago," he said. "This is one of Ireland's largest organisations and it's treating people like children."

Industry watchers claimed Dunnes could be forced into a sale after suffering falling sales during the high-profile price war between Tesco and discounters Lidl and Aldi.

"There's definitely something happening," said Damien O'Reilly, retail management lecturer at the Dublin Institute of Technology.

He claimed Dunnes' profits had been badly squeezed in recent months between Tesco and the discounters, forcing it to cut grocery prices by up to 25% during sales. "That is unprecedented," he said.

Asda also refused to comment on the speculation over Dunnes.