A merger between European Metal Recycling (EMR) and Metal and Waste Recycling (MWR) is likely to reduce competition.

That’s according to the Competition and Markets Authority (CMA), whose second phase of the investigation found the merger is “not in the best interests” of customers and suppliers in the UK scrap metal sector.

It added the merger could also lead a “worse deal” for those suppliers and customers.

The two companies recycle scrap metal waste for reuse by steel mills and foundries.

EMR is the biggest metal recycler in the UK and MWR, though smaller, is EMR’s strong rival in London, in the South East for shredder feed and in the West Midlands and North East when buying scrap from large industrial suppliers.

The CMA said: “The investigation provisionally found that, while there are local competitors for buying and recycling metals in the South East and London and for buying from large suppliers in the West Midlands and North East, their combined strength is not enough to prevent a substantial loss of competition resulting from the merger.

“Similarly, while some other metal recyclers sell new production steel to UK mills, the CMA provisionally found that competition would be affected by the merger as these firms would not provide the material in sufficient volumes.”

The competition watchdog is inviting comments on both its provisional findings and possible remedies, which include selling all or part of one of the merged companies.