Somerfield may be forced to sell 14 of its 115 former Safeway stores after a review by the Competition Commission, it has been revealed.
The new owner of the stores has been told that it may have substantially reduced competition in 14 retail areas of the UK.
Somerfield, which acquired the convenience stores from Safeway owner Morrisons last year, may now have to sell the sites.
The Competition Commission said the provisional findings of a review into the deal identified 14 grocery markets where competition is expected to be reduced " resulting in higher prices or reductions in quality, range or service".
Somerfield and other interested parties now have until August 16 to respond to the study before the Competition Commission delivers its final verdict.
The 14 stores in question - none in the West Midlands - are at: Bedlington in Northumberland; Filey, North Yorkshire; Johnstone and Paisley, Renfrewshire; Kelso and Peebles, Scottish Borders; Littlehampton, West Sussex; Middlesbrough Linthorpe; Newark; Pocklington, East Riding; Poole Bearwood; South Shields; Whitburn, West Lothian; Yarm, Stockton-on-Tees.
Christopher Clarke, chairman of the Competition Commission inquiry, said: "We believe the only effective means of restoring competition in these areas is for the identified stores to be sold to a suitable grocery retailer who will offer choice and actively compete in the relevant local markets."
Somerfield, which completed the transfer of the stores in March, is in the midst of a three-year programme to refurbish the sites.
The company said: "Somerfield notes the provisional findings of the Competition Commission and will be making further representations both in writing and at the remedies hearing in early August."
Rhys Williams, a retail analyst at Seymour Pierce stockbrokers, said the ruling seemed "complete madness".