TESCO was facing hefty fines in Thailand last night and the imprisonment of top executives after the ruling military council stepped up its campaign against big retailers.

The Commerce Ministry has threatened the supermarkets group, and nearly a dozen Thai and foreign-owned retailers, with fines of up to six million baht (£84,000) and three-year jail terms for its top executives if they fail to comply with certain guidelines.

This marks the latest stage in a simmering dispute over retailers’ expansion plans, which the authorities claim are driving small shopkeepers out of business.

Karun Kittisataporn, the Commerce Ministry secretary- general, was quoted as saying that guidelines had been drawn up, banning big supermarkets from selling goods at “unfairly low prices” and giving “too much discount” to consumers.

Tesco counts Thailand as its third-biggest market, after the UK and South Korea, and generates £1 billion of sales a year from its 200 stores there. It had plans to open a further 170 outlets this year.

A recent meeting between the retailers and the military council to discuss a “voluntary” agreement to suspend expansion plans ended without agreement.

A spokesman for Tesco said last night that the developments would not change the retailer’s position. “We are talking to the Government about this and will continue to do so,” he said. “We are confident Tesco has brought a lot of benefit to Thai consumers.”

After eight years in Thailand, Tesco is the largest international retailer there, ahead of Casino and Carrefour.

Further details on the guidelines, which are due to take effect next week, were unavailable last night.

The Commerce Ministry is set to hold talks with representatives of the retailers today. The Government’s moves to restrict retailers’ expansion began before the seizure of power by the military last month.