USA Waste

The new entity will control about 20 percent of the $ 40 billion U.S. market in waste.

Though the merger will bring together the largest and third-largest companies in the waste hauling business, Mr. Miller said that he and Mr. Drury did not expect major antitrust problems. The two companies do have a large share of the market in some regions, including New York and Houston, but barriers to entry are so low that analysts said it would be surprising if regulators demanded that many landfills, disposal contracts or other assets be sold before allowing the merger.

"I get the impression they don't expect more than $500 million to $700 million of their revenue to be vulnerable, " said Melissa White, who follows the industry for Piper Jaffray in Minneapolis.

USA Waste Services Inc.'s proposed $ 20 billion purchase of Waste Management Inc. will prompt close Justice Department examination of local garbage-hauling markets that could lead to divestitures in some areas, antitrust experts say.

With the combined company controlling 20 percent of the nation's trash disposal business, the Justice Department is likely to look closely at what impact the acquisition would have on local markets, experts said.

''What they are going to look at is a series of local markets for picking up commercial trash, '' said Donald I. Baker, a Washington lawyer who headed the Justice Department's antitrust division in President Gerald Ford's administration. ''So they are going to look at what the alternatives are'' in local markets.

The Justice Department has long scrutinized the trash hauling industry because it ''is a traditional area of collusion'' by market players bidding for franchises granted by local governments, said Lloyd Constantine, a New York antitrust lawyer who investigated the industry for the New York attorney general in the 1970s.

''Economists predict the higher the market concentration the more likely there is to be collusion, '' he said. ''That is not a theoretical issue in the waste hauling industry.''

Robert ''Steve'' Miller, chairman and chief executive of Waste Management, said the companies were prepared to make divestitures in the ''few markets (in which) we have high concentrations.''

Last summer, USA Waste Services Inc. agreed to sell a Western Pennsylvania landfill to clear the way for its $ 2.2 billion acquisition of United Waste Systems Inc.

The company agreed to sell a landfill near Pittsburgh to resolve Justice Department concerns that it would control 60 percent of the waste disposal business in Allegheny County. The combination gave the combined company ownership of more than 150 landfills and 270 garbage collection companies.

The courts, however, have ruled that even a big local market share does not necessarily translate into anti-competitive market power.

The Justice Department failed in 1984 to stop Waste Management's acquisition of a rival trash business in the Dallas area even though the combination gave it a 48.8 percent share of the local market.

The 2nd U.S. Circuit Court of Appeals held that the local garbage business was so easy to enter that the acquisition didn't give Waste Management the power to dominate the Dallas market.

Since then, the Justice Department has shifted its focus from trash routes to landfills when studying barriers to entry, said Charles F. Rule, a former assistant attorney general for antitrust who worked on the 1984 case.

''If you have somebody in a particular market who has control over a landfill, then it becomes very difficult for a new entrant to come in because of the difficulty of getting new landfills'' approved by local governments.

Citing an analyst's research note on the deal this morning, the second arbitrager said states where the companies' operations are dually concentrated include Pennsylvania, New York, California, Virginia and Florida.