THE proposed multi-billion pound takeover of Corus by Brazilian steelmaker CSN was in doubt yesterday after it emerged the company may not be given clearance by the European competition regulator.

In a notice released by the European Commission, the committee said that the bid from CSN, which has made the highest bid in its battle with Indian group Tata Steel to buy the Anglo-Dutch steelmaker, may infringe competition rules.

It said: "On preliminary examination, the commission finds that the notified transaction could fall within the scope of EU merger regulations.

"However, the final decision on this point is reserved."

The development appeared to put Tata, which has already been granted European clearance, ahead as the front-runner in the bidding war.

CSN has bid 515p a share for Corus, which employs about 3,000 people in the North-East, although Tata is thought to be preparing an offer of about £5bn. However, CSN has maintained that it will not back down.

Corus set a deadline of January 30 for offers from both parties, and has warned the company could go to auction if the sale is not settled.

Tata - part of the Tata Group that also owns Tetley Tea - made the first bid in October, with an offer of 455p a share, but since then has twice been trumped by CSN.

Corus shareholders were due to decide last month on Tata's opening bid of 455p a share, but the meeting was postponed until further notice because of the ongoing bidding war.

A final decision by the European Commission on CSN's takeover approach is expected later this month.