Germany's top supermarket chains are being investigated by the Federal Cartel Office over claims they are selling basic food items at a loss to boost their market share.
Such a practice is common thoughout the world, but is still outlawed in Germany.
A spokesman for the cartel office said its investigations which now involve Aldi, Lidl, Norma, Plus and Wal-Mart were still at an early stage and he said it was simply trying to see whether there had been a breach of competition law.
The decision to mount a probe comes against the backdrop of a fierce price war between the major players.
Aldi this week cut prices by 25% on a range of items from cola to sugar to compete with price cuts made by Wal-Mart in the spring. Plus, Lidl and Rewe have already slashed prices as they attempt to see off Wal-Mart.
The cartel office is worried that this cut-throat competition will force many smaller shops out of business something the country's retail laws are designed to prevent.
The investigation began a few weeks ago when the cartel office received a complaint that Wal-Mart was selling a range of groceries below cost following with its "Smart-Program" of price cuts. Wal-Mart denies the allegation.
The cartel office did not disclose who had lodged the complaint. But it has since widened the inquiry to include rival chains even though no complaints had been received.
Its spokesman added: "Wal-Mart has already replied to our questions and we are examining their responses."
Analysts say the price war is another sign German retailers are trying to pry open a nest of retail laws covering everything from discounts to opening hours. The laws are designed to protect smaller retailers and keep order in the market. But some rules date back to the 1930s.
One analyst said: "Wal-Mart is still too small in Germany to really drive the market. What it is doing is provoking the market."
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