merge.py

from itertools import ifilter, imap

def merge(sets):
    set_map = {}

    for s in ifilter(bool, imap(set, sets)):
        # Where can we store it?
        try:
            el = set_map[next(ifilter(lambda x: x in set_map, s))]
            el |= s
        except StopIteration:
            el = set_map[next(iter(s))] = s

        set_map.update({e: el for e in s})

    return {id(s): s for s in set_map.values()}.values()

print merge([{1,2,3}, {4,5}, {3,7,8}, {8,9}, {4,10}])