Wm Morrisons’ law firm Ashurst Morris Crisp has reportedly told Sir Ken Morrison that his bid for Safeway would go through, possibly with some minor undertakings on divestments.

Ashursts was in danger of getting egg on its face when the Office of Fair Trading (OFT) referred Morrisons’ all-share offer, but competition lawyers have been highly critical of the regulator’s decision. With virtual unanimity, competition lawyers disapprove of the OFT’s referral of the bid to the Competition Commission.

Morrisons, whose stores are predominantly in the North, presents less geographical competition issues than fellow bidders Sainsbury’s, Tesco and Walmart, say lawyers.

Many have said that, against market predictions, the OFT referred the decision to the Competition Commission because it found justifying Morrisons’ eligibility to buy Safeway too risky and difficult.

“The OFT fouled up on this one, somewhat unexpectedly, by taking the easy option,” one competition lawyer involved in the Safeway bid commented. “The OFT would have had to work out a methodology explaining why Morrisons’ bid was not anticompetitive. This would have set a precedent that the other supermarket bidders could have challenged, causing the regulator no end of headaches.”

The only bidder to get the green light from the OFT was Philip Green, the owner of Bhs. Green’s banks – Merrill Lynch, West LB and Halifax Bank of Scotland – are being represented by Shearman & Sterling competition partner Chris Bright.

Bright said: “The OFT referred the bid on local market issues. There’s no good reason why they shouldn’t have been able to sort out the local market issues themselves.”

The Safeway bid was the first big test for Simon Priddis, the Cleary Gottlieb Steen & Hamilton associate who joined the OFT as director of mergers a year ago.

Alongside the deputy director general of the OFT Penny Boys, Priddis was the person responsible for Safeway’s referral.

Director general John Vickers, who has advised supermarkets on mergers in the past, took himself out of the reckoning to avoid potential conflicts.

A more detailed explanation of its reasoning on Safeway was expected from the OFT at the time of going to press.