Rescue takeover deals in ailing industries such as carmaking will be blocked if they are judged anti-competitive, a senior official has warned, dealing a blow to hopes that rules would be relaxed to help sectors hit by the financial crisis.

Peter Freeman, Competition Commission chairman, said he would be “sensitive” in his dealings with troubled businesses but would not yield to demands to wave through mergers that could cause long-term economic damage. His remarks – in the wake of the government’s unprecedented decision to over-ride merger laws in Lloyds TSB’s takeover of HBOS – highlight competition experts’ concerns that easing rules to stabilise other struggling sectors could hurt consumers and stunt economic recovery.