POTENTIAL bidders for the London Stock Exchange were given the green light to pursue a takeover yesterday, despite lingering competition concerns.

The Competition Commission said it would allow a merger with either Deutsche Boerse or Euronext, even though it would make it difficult for other exchanges to compete with the LSE in the trading of UK equities.

Approval would hinge on the groups agreeing to reinforce the independence of the LSE's current clearing services provider, LCH.Clearnet.

They must ensure that potential competitors to the LSE are not obstructed when trying to gain access to the clearing provider.

Euronext vowed to scrutinise this condition before deciding whether to press ahead with an offer that analysts believe could be worth more than £1bn.

German rival Deutsche Boerse had pulled out after its interest in buying the LSE came under fire from shareholders. It may now revive its bid.

Australian bank Macquarie has expressed an interest in the LSE and is thought to be seeking partners for a bid.

The Competition Commission began its inquiry into the potential takeover of the LSE seven months ago and published its provisional findings in July.