Pre-tax profits increased by 5 per cent to pounds 215m on sales that

Pre-tax profits increased by 5 per cent to pounds 215m on sales that were flat at pounds 3.4bn. Tesco also said it would not be out-gunned.Safeway's comments came as Argyll announced a healthy set of trading figures for the six months to 14 October. They are not cutting prices across a really wide range of goods."Asda said it believed its prices were consistently lower than Safeway's. However, Mr Smith also called for the supermarkets to call off hostilities. "We need to get some sanity back in the situation," he said.Clive Vaughan of the retail consultants Verdict Research dismissed the price battle as a phoney war "This is not really a price war, it is just posturing. Customers will qualify for refunds on these products if they find them cheaper in rival supermarkets.Colin Smith, chief executive of the Argyll group, which owns Safeway, said: "We have matched and will continue to match our competitors on price."Though Mr Smith did not mention his competitors by name, it is thought Safeway finally tired of Asda's price cutting and reluctantly decided to follow suit. It buys its bananas at 30p per pound.Safeway has promised to match the lowest prices on other lines of fresh produce: cauliflowers, loose tomatoes, carrots and onions.It has also relaunched its Price Watch campaign in the run-up to Christmas, offering lower prices on 100 lines such as brussels sprouts and boxes of Roses chocolates.

Asda yesterday increased its banana prices to 29p per pound, with effect from today - a move to be matched by Tesco.But even at this price Safeway would be selling at a loss. NIGEL COPE Safeway stepped up the pressure in the supermarket price war yesterday when it pledged to match its competitors on key fresh produce prices and offer refunds on a range of other products if shoppers found them cheaper elsewhere. The move follows intense price cutting, first by Asda and later Tesco, that has seen the price of bananas tumble to as little as 19p a pound compared with 49p only a few weeks ago. On this basis, the two sidesagreed to meet again this afternoon, after the presentation of Swalec's interim results.Mr Walker said the original proposal, which he had turned down, was at a substantial discount to the market price of Swalec, and included a full cash alternative at an unspecified discount to the offer level.But Welsh Water did indicate that it was prepared to pay more in return for a recommendation from the Swalec board, subject to financing arrangements.The offers being discussed exclude the value of Swalec's stake in National Grid, which is being floated on the stock market next month, with the value passed on to Swalec shareholders.. But on the understanding that Welsh Water was willing to consider a significantly higher offer, Swalec would provide detailed information that would "clearly demonstrate that Swalec is worth substantially more than Welsh Water's inadequate proposal".This proposal was refused after a half-hour meeting between the senior management of the two sides.But Welsh Water's senior management, led by Ian Evans, the chairman, appeared to have a change of heart after spending three hours with its advisers in another room at Rothschild.According to Mr Walker, Welsh Water's advisers then said their clients were prepared to offer a better price than the one suggested in the morning. But the Department of Trade and Industry said Mr Lang was not planning to announce any changes in regulation.Mr Walker said the indicative offer tabled yesterday would be firmly rejected by his board because of its complete failure to reflect shareholder value. Swalec's shares began the day at 856p and finished at 861p.After a day in which executives of the two companies and their advisers were closeted in the London offices of Rothschild, Swalec's merchant bank, the two sides agreed to meet again this afternoon.Swalec said Welsh Water had stated that before making any formal offer it wanted to see the contents of a speech by Ian Lang, President of the Board of Trade, this afternoon on utility regulation.This followed rumours in Westminster that Mr Lang was about to clamp down on the utilities.

PETER RODGERS Business Editor South Wales Electricity is today expecting a new and higher offer from Welsh Water of more than pounds 9 a share, valuing the electricity distributor at over pounds 900m.Andrew Walker, chief executive of Swalec, said Welsh Water now realised that to secure a recommended offer any bid would have to be "well north of pounds 9".His statement followed Swalec's rejection yesterday of an outline offer of between 825p and 840p a share as "totally unacceptable". There is little evidence, however, that the Ogonis have been cowed by the execution of their hero, Ken Saro- Wiwa If anything, they are more ebullient than ever.. Schools, health centres and roads are in an appalling state of disrepair. Services such as electricity and telephones are largely non- existent.The people face levels of persecution which are extreme even by the abysmal standards of the current military regime. We now feel very aggressive towards Shell."For its part, the world's largest oil company has resolved not to return to Ogoniland without the good will of its inhabitants.Shell, which operates in the Niger delta as a joint venture partner with the Nigerian government and two other European oil companies, is regarded as a collaborator with successive repressive regimes including that of General Sani Abacha, who has been in power for two years and is set to stay for at least another three.The Nigerian government is conducting a policy of wilful neglect in Ogoniland. They say that only one local man was employed in a senior staff position by Shell."We used no violence against Shell employees," Benjamin insisted "But if Shell comes back then things could get violent Mosop has always been a peaceful organisation Although it's been suppressed, it's still in our minds.

And significant sums of money paid out where oil production operations are taking place. The people of K Dere, however, claim that all they have got out of Shell has been one school block and some classroom equipment. There was widespread sabotage in Ogoniland and we don't pay compensation in such cases. Our staff and equipment were facing so much danger that in the end we decided to withdraw."Shell has in recent years mounted a vigorous community aid programme in an effort to win over inhabitants of the oil producing areas School blocks, health centres and roads have been built. "The Ogonis' demands have gone further than those of other minorities. Shell admits responsibility for three-quarters of the oil spills in those parts of the Niger delta where it is still operating. But it claims that in the last eight years of its presence in Ogoniland, 69 per cent of oil spills there were caused by sabotage."We haven't seen the same level of agitation against Shell and the government as in Ogoniland," Egbert Imomoh, general manager of Shell's eastern division in Nigeria, said.