The supermarket Safeway has been reported to the Office of Fair Trading (OFT) because of the big discounts it is offering on petrol prices.

Last week Safeway launched a deal to give customers up to 20 pence off a litre of petrol if they spent up to £150 in the store.

What we are doing is perfectly within the law

Kevin Hawkins Safeway

Ray Holloway, of the Petrol Retailers' Association, told the BBC he had written to the OFT to complain about the supermarket chain's offer.

"It's so blatantly cross-subsidy of one part of the business by another that I think it warrants attention by the competition authorities," he said.

Mr Holloway accused Safeway of behaving cynically and anti-competitively.

Aggressive cuts

But the supermarket's communications director Kevin Hawkins said his company was doing nothing wrong.

"We are confident that what we are doing is perfectly within the law, and certainly in the interests of our customers," he said.

Independent retailers argue that these sorts of aggressive price cuts by the supermarkets help push many small operators out of business.

But Mr Hawkins said petrol was a very competitive market and small retailers had been closing down for many years.

Other schemes

When Safeway announced its petrol promotion last week, its rival Asda responded with a straightforward cut in the price of its petrol.

Sainsbury already offers a petrol voucher scheme for shoppers.

Mr Holloway said that as well as reporting Safeway to the OFT, he had asked for other supermarket petrol schemes to be investigated.