The Icelandic government and other parties are looking to file a “cancellation action” against the Europe-wide trademark on “Iceland”.

The supermarket would not be forced to change its name, but it could no longer prevent Icelandic firms registering the name “Iceland”.

In a statement, the government said: “Any decision about proceeding with this claim will only be made after full consideration of the interests of Icelandic companies and our people.”

An Iceland spokesperson added: “We are not aware that our use of the Iceland name has ever caused any confusion with Iceland the country.”