A lack of competition in local areas is triggering so called 'bus wars', affecting millions of people who depend on buses to get around.
Passengers across the country can expect less frequent services and in some cases higher fare prices, the Competition Commission (CC) said today.
This is because the main bus companies face little or in some local areas, no competition at all.
The five largest bus operators (Arriva, FirstGroup, Go-Ahead, National Express and Stagecoach) provide 69% of local bus services in the UK.
Head-to-head rivalry on particular routes has resulted in 'bus wars', and other behaviour that does not benefit passengers.
Jeremy Peat, chairman of the CC's local buses inquiry group, said: "Buses provide an essential, if unsung, daily service for millions of people in the UK, carrying twice the number of passengers as do trains.
He added: "Many passengers are dependent on the bus and do not have a realistic alternative if fares rise or services deteriorate."
The Commission is now consulting on measures to open up more markets by tackling the factors which can hinder competition.
It is also seeking views on whether Local Transport Authorities should take measures to encourage competition in the UK.
Mr Peat said: "We are looking for practical measures that will address these factors and open markets up to the greater rivalry which will benefit passengers."