The battle between the Competition Commission and Tesco is hotting up, as the watchdog has re-issued its case for a competition test.

Tesco fiercely opposes the plan, which would make it harder for supermarkets to open stores in towns where they already hold a large market share.

Tesco won a Competition Appeals Tribunal in March, when it was ruled that the proposal had not been properly thought through.

But a more detailed case has been prepared by the commission this time, The Times reports.

Asda is backing the Competition Commission's test proposal.

Peter Freeman, chairman of the Competition Commission, said: “The test is likely to have a positive effect for consumers by ensuring that they benefit from greater competition and choice between retailers in their local areas.”

Tesco may launch another appeal against the propoed test, with Lucy Neville-Rolfe, director of corporate and legal affairs at Tesco, stating: “To continue to recommend a burdensome competition test is a misguided proposal that will cost jobs by deterring investment in the areas that need it most.”

A meeting next month between the commission and the UK's largest supermarkets will take place before a final decision is made on October 5.

A spokesman for Asda said: “Anyone opposed to this is in effect opposing more competition.”