A merger of the waste management firms Veolia and Suez could lead to a loss of competition and an increase in costs for local authorities, a regulator has warned.

The Competition and Markets Authority (CMA) launched an inquiry into the merger deal in October after concerns were raised about the possible loss of competition within the waste sector.

Veolia and Suez are the only suppliers in the UK active across the entire waste management chain, and are two of the few firms able to service the largest and most complex waste management contracts with councils.

The CMA has provisionally found that the merger raises competition concerns.

It warned this would mean less choice when procuring key waste and water management services, which, in turn, could lead to an increase in costs that would be passed on to residents through council tax rises.

Chair of the CMA inquiry group, Stuart McIntosh, said: ‘We all use waste and recycling services in some way so it's vital that these markets are competitive and provide good value for money.

'This is all the more important at a time when local authority budgets are already stretched and waste management services have to evolve to help achieve net zero targets.

‘We've heard from a number of customers, including local authorities, who are concerned that this merger could reduce competition in markets where choice is already limited, leading to higher prices or poorer services.

‘We share those concerns and want to make sure that commercial customers and councils don't get a worse deal, leaving taxpayers to foot the bill at a time when household budgets are already under huge pressure.'