A criminal inquiry is under way into how one firm alone might have been selling millions of eggs a year to High Street retailers who had no idea that they were part of a sophisticated scam.

Shoppers are believed to have been duped into paying double the price for free-range to avoid eggs from birds housed in battery cages. Many imported factory-farm eggs contain salmonella.

Police inquiries are centred on a business in Bromsgrove, Worcestershire, where it is alleged that millions of cheap eggs were imported from France and Italy and repackaged and labelled as free-range. They were bought by wholesalers at free-range prices. The farm had its own free-range chickens and also imported genuine free-range eggs.

The egg industry fears that a prolonged investigation into the alleged fraud could blight the £220 million-a-year free-range market, which accounts for 35 per cent of the five billion eggs sold each year.

The business under investigation was selling around 360,000 eggs a week through Dean’s Food, the country’s biggest supplier. Dean’s supplies more than half the 1.75 billion free-range eggs sold in own-brand boxes to Tesco, Sainsbury’s Asda and Morrisons.

Retailers were last night urged to check immediately that none of their stock was being sold under the wrong label. The scale of the alleged fraud is unclear but the Department for Food, Environment and Rural Affairs (Defra) called in the British Egg Industry Council and leading supermarkets this week for a dressing-down.

Industry sources said that a whistleblower had tipped off Defra about alleged irregularities at the company. Imported eggs were allegedly stamped with bona-fide egg producer numbers.

John Widdowson, of the British Free Range Producers Association, said: “We are all absolutely outraged if this cheating has been going on and if proven we would support a high-profile prosecution.”

The British Retail Consortium said: “This practice is fraud, a deliberate attempt by rogue egg suppliers to mislead consumers and we fully support the immediate action that Defra has taken.”

STORES AFFECTED

Tesco, Sainsbury’s, Asda and Morrisons have been sold free-range eggs from the farm being investigated

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