Asda to quit fight for Safeway

ASDA has ruled out a legal challenge to the Government's decision to block its bid for supermarket chain Safeway.

There had been fears that the long-running battle for Britain's fourth-biggest food retailer could be delayed further if Asda, owned by US giant Wal-Mart, forced a judicial review of the Competition Commission's decision announced on Friday.

Yorkshire-based Morrisons was the only bidder cleared to pursue Safeway. Larger rivals Asda, Tesco and Sainsbury were blocked from buying any of Safeway's 480 stores because of fears that it would lead to less competition and higher prices.

Morrisons is expected to begin talks with the Government on Monday to thrash out how it would sell the 53 Safeway stores ordered by the ruling. The process is expected to take several weeks. The supermarket chain will also resume its scrutiny of Safeway's books.

Once the framework is agreed on the store disposals, Morrisons has 21 days to announce its bid. The Sunday Times reported that the Safeway board wants Morrison to add a £500m cash sweetener - worth 50p a share - to its previous £3bn all-share offer.

Philip Green, the Bhs-to-Arcadia entrepreneur, was not subject to the Competition Commission inquiry and is said to be waiting for Morrisons to make its move before deciding whether to bid.