Five suitors are pursuing Safeway

The Competition Commission had been due to hand in its recommendations to Trade and Industry Secretary Patricia Hewitt on Tuesday.

But the Department of Trade & Industry (DTI) said it had extended the deadline by six days to 18 August following a request by the Commission.

There has been widespread speculation that the Commission will recommend that bids from Tesco, Asda, and Sainsbury be blocked, clearing the way for Bradford-based William Morrison to clinch the Safeway takeover.

Although the government has the final say over whether to allow takeovers which raise competition issues, it usually follows the advice of the regulators.

Competition concerns

A fifth potential buyer, retail entrepreneur Philip Green, was exempted from the Competition Commission enquiry because he has no interests in the food retail sector.

Mr Green, the boss of clothes retail group Arcadia, has expressed interest in buying Safeway, but has not yet tabled a formal bid.

A takeover of Safeway, the UK's fourth-biggest supermarket chain, by fifth-ranked William Morrison, would mark a major realignment of the British food retail sector.

Supporters of the Morrison bid have argued that it would create a fourth force in the supermarket industry capable of taking on the three food retail giants - Tesco, Asda, and Sainsbury.

They point out that Morrison's store network, based predominantly in the north of England, would fit better with Safeway, which is particularly strong in southern England and Scotland.

Delay

The DTI said the Commission had asked for more time following a request last week for a further meeting by one of the parties involved in the investigation.

"I have decided to give the Competition Commission a six day extension to ensure that the views of all parties and the group on the issues that have been raised regarding these mergers are accurately reflected in the final report," said DTI Minister Jacqui Smith.