Eircom may sue IFA Telecom, the phone company owned by the Irish Farmers' Association, for defamation over accusations that it is using illicit tactics to woo back former customers.

Dismissing the allegations as "outrageous", Eircom said it was "considering its legal position". Privately, officials at the firm say they are "flabbergasted" by the claims and are considering a libel action.

In an unprecedented attack on the incumbent, IFA Telecom, which claims 12,000 customers, said it had "widespread evidence" that Eircom was "systematically engaged in anti-competitive practices", including "misinformation" and "intimidation" of the public.

One allegation is that Eircom has lobbied former customers within the three-month "no contact" period set by law.

The accusations come a month after telecoms regulator ComReg ruled that Eircom field sales staff had given misleading information about a rival's prices.

Last night, ComReg confirmed it was investigating the IFA Telecom claims.

IFA Telecom has also urged the Competition Authority to look into its complaints. In addition, it has made more serious allegations against Eircom to the Garda.

Ms Celine Reynolds, IFA Telecom general manager, said: "The extensive evidence gathered from IFA Telecom customers now clearly indicates that Eircom is systemically engaging in anti-competitive practices."

A spokesman for the IFA said it had not gone public with its charges lightly and had consulted its lawyers before doing so.