Morrisons' chances of taking over Safeway were boosted by Tuesday's 'remedies statement' from the Competition Commission.
The Commission said: 'A Morrison/Safeway merger could be pro-competitive in creating a powerful fourth national player to offer competition to Asda, Sainsbury's and Tesco.'
A source close to Morrisons said the management takes the view that this is only the half-way stage in the Commission's inquiry and that anything could yet happen.
The Commission did raise concerns about Morrisons' ability to integrate Safeway without sacrificing efficiency.
RW Baird retail analyst Paul Smiddy said: 'If it (the remedies statement) was helpful to anyone, it was helpful to Morrisons. But the Competition Commission is still keeping every available weapon back and could yet produce restrictions, even for Morrisons.'
The Competition Commission is due to report its findings to the Secretary of State for Trade and Industry on August 12.
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