Adidas may have triggered a possible trade war in New Zealand with rival clothing manufacturers Canterbury.

The row started when Canterbury produced a jersey to commemorate the 1924 All Blacks Invincibles. Both adidas - the official All Blacks merchandise supplier - and the New Zealand Rugby Football Union cried foul.

The latest twist in the saga reported in today's Sunday Star-Times indicate that adidas has warned retailers it will remove its stock from their stores if they refuse to stop selling Canterbury's rival Invincibles jersey.

The NZRFU went to the High Court to try and stop the jersey being sold, claiming it breached intellectual property rights. But the court dismissed the case. The NZRFU is considering further court action but adidas has gone on the offensive.

In the latest twist to the jersey saga, adidas sent a letter to sports goods retailers last week , giving them until August 27 to choose between its All Blacks merchandise or the Invincibles jersey.

Canterbury is "incredulous" with the adidas letter and has sought legal advice on breaches of the Fair Trading Act and Commerce Act. Their lawyers say the letter is unlawful and damaging. They were writing to adidas yesterday, demanding it issue a retraction to retailers.

One major retailer, Stirling Sports, has already agreed to adidas' demands. It sells an estimated $2 million worth of adidas brand goods annually.

Adidas' national sales manager told retailers in the recent letter, "Any retail outlet that currently stocks adidas All Blacks/Super 12 products that is seen to be supporting the Canterbury Invincibles jersey, by way of stocking it, will no longer enjoy access to adidas' rugby licensed products."

Canterbury's ceo Peter Garbett was not impressed with his rival's demands. "It seems quite remarkable," he said, "that a global business is frightened of a small business like Canterbury doing something that the courts have found to be perfectly legal."

Adidas managing director Craig Lawson refuses to retract their stance. "It's important that our retailers fully understand and are under no illusions as to which is the correct licensed apparel. We don't want our retailers to be associated with another product which we believe doesn't have the same right."