Veolia Environnement chief executive has said a merger with Sita parent Suez would make sense.
Speaking to BFM Business radio in France, Antoine Frérot said that while a merger would make strategic sense, it would also be difficult to implement.
He added: “Outside of France, the two companies are very complementary, especially geographically, but the project foundered on the issue of competition in France.”
In October the two French waste and utilities giants denied market speculation they were planning to merge.
Frérot told BFM that the firm has another year of cost cutting ahead.
Veolia announced a debt relief programme of divestment and cuts in December 2011 following a series of profit warnings and mounting concern from investors over the company’s €14.7bn debt.