British retailer J. Sainsbury plc yesterday bowed to a legal action threat from Nike Inc by withdrawing from sale a set of unofficially obtained polo shirts which the US brand giant says are fakes.

The issue highlights a snowballing dispute between British supermarket retailers and the international luxury goods manufacturers that are reluctant to supply them.

The brand companies argue that their investment in quality and marketing can be undermined by inappropriate retailing. Supermarkets dismiss this as an excuse for keeping prices artificially high, and have resorted to "grey market" sourcing from independent suppliers - often with an accompanying publicity campaign.