In S.E. Michigan, most of the cities use only one trash hauler.
Right now, most cities use Waste Management (WM) for their residential pickup.
We also have other trash haulers who are now primarily used by local businesses (Great Lakes, Tringali).
The contract that you've described sounds pretty much like the boiler-plate language they use down here.
There are some advantages to this in that when residents do call to complain about their trash pickup, it's much easier to track down the offending truck (no pun intended).
I don't have a copy of the last contract, but I do remember a provision included where the municipality can terminate the contract if they are dissatisfied by the service the trash hauler is providing, so in the end it's really a no-lose scenario for the municipality.
The companies fight over providing the service at the lowest cost, ultimately benefiting taxpayers, and the cities are free to terminate the contract if they are unhappy if the trash hauler doesn't provide acceptable service (i.e. punctuality, missed streets, residental complaints, etc.).
