A whistleblower has accused the two largest grocers in the UK of having an "understanding" not to undercut each other's prices on the most popular products.

As a former senior director of Sainsbury's, he claims that his former employer and Tesco had agreed to keep the prices of the most popular everyday products identical in order to stop consumers shopping around.

The mole, who wishes to remain anonymous, told the Sunday Times: "This is a very sensitive issue but you basically don't want to get into a price war on the big sellers, the key lines."

The revelation might explain why the high-profile price wars do not involve everyday items on what the former director alleges was a "known value" list. It might also explain why, last week, prices of milk, Heinz baked beans and Kellogg's cornflakes, among others, were identical in the two stores.

He added: "If you look at the prices charged for these items, they are identical, which is no coincidence. Senior staff constantly move between the supermarkets, which helps perpetuate the understanding."

Both Sainsbury and Tesco denied the claims, insisting that no agreement is in place, but the a question mark has been firmly placed over earlier government investigation conclusions that the UK grocers are not operating a cartel, despite having higher prices than their US and continental counterparts.

Tesco's latest round of price cuts was branded a "scam" by a prominent UK newspaper, to read more, click here.

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