Greyhound has produced a leaflet which advertises a "limited offer" of €79 for a 12-month service.
The leaflet is understood to have been hung on the bins belonging to the City Bin Co -- which entered the Dublin market in November
The move prompted the firm's lawyers to warn Greyhound to stop "interfering" with their customers' bins.
But the details of the offer also sparked a furious reaction from City Bin Co -- whose lawyers warned Greyhound that it could be breach of competition rules as it only targets residents from its customer base.
"We note that your promotional campaign is addressed to 'Dear City Bin Customer' and has the sole purpose of eliminating the City Bin Company in its capacity as a new entrance on your existing routes," the firm's lawyers said in a letter to Greyhound.
"A deliberate attempt by Greyhound to unfairly eliminate competition from certain providers only is unlikely to be considered favourable by the Competition Authority," their letter adds.
The promotion offers those who switch a "limited offer" of €79 -- undercutting City Bin Co by €20.
Despite suggestions that it is an attempt to "unfairly eliminate competition", the Competition Authority officials examined the leaflet and determined that there were no grounds for an investigation.
"No complaint has been filed and on examination, there are no grounds for an investigation at this point," a spokeswoman told the Herald.
Meanwhile, relations between the two firms were described as "hostile" and "intense", by sources today.
Greyhound has desperately attempted to prevent the City Bin Co from luring its customers since its entrance into the market.
City Bin Co's decision to offer customers an initial joining price of €99 prompted Greyhound to issue staff with a memo which said that the firms were "at war".