Britain's Sunday Times newspaper reported that European regulators could threaten to stop the proposed takeover of Rio Tinto by BHP Billiton because of the dominance the pair have over the world's iron ore supply.

The report said the warning will come in a long awaited "statement of objections" from Brussels, which will be crucial in deciding whether the second-largest corporate takeover ever can go ahead.

A merged BHP-Rio would control about a third of the seaborne iron-ore trade, thanks to the pair's huge mines in northwest Australia, which are the main suppliers of iron ore to steel mills across Asia.

The report said that BHP which launched its bid for Rio a year ago, will have four weeks in which to tell the commission how it plans to overcome its objections.

A spokeswoman for Rio Tinto refused to comment on the situation, while a spokesman at BHP was not available for immediate comment.