The Competition and Markets Authority (CMA) has published an interim report in its investigation of a merger between logistics companies GXO and Wincanton.
The CMA independent inquiry group’s initial assessment of GXO’s takeover of Wincanton is that it is ‘likely to reduce competition in the supply of dedicated warehousing services to grocery customers in the UK’.
GXO agreed to acquire Wincanton in April 2024, but the takeover was subject to checks from the CMA, given the prominence of both companies in the UK logistics and supply chain sector.
Then on 4 November 2024, progress in the merger hit a speedbump as the CMA found that the evidence it had gathered suggested the deal ‘may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom’.
It elaborated that the acquisition ‘gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of mainstream contract logistics services in the UK’. As a result of these concerns, a Phase 2 investigation was deemed necessary.
Now, a further blow to the progression of this deal has been dealt by the CMA, with its initial assessment being that the concerns raised are valid, and that the deal may not be in the interest of fair competition.
The report identifies that ‘GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK’. The inquiry group notes that alternatives for grocery customers exist – such as switching to the third supplier, DHL – but claims that ‘these remaining alternatives would not be sufficient to prevent fees rising’ and that ‘the deal could raise costs for grocers that rely on dedicated warehousing services as part of their logistics’.
Richard Feasey, chair of the CMA independent inquiry group, said: “Contract logistics services play a critical role in ensuring that supermarket shelves are fully stocked for customers in the UK every day of the year. Our initial view is that this merger could raise the costs of these services and reduce choice for supermarkets who rely on these services for moving goods across the country.
“We want to ensure competition in this market is working as well as it can to manage costs for supermarkets and grocers, and ensure products continue to reach supermarket shelves efficiently.”
The CMA has invited any interested parties to respond to these provisional findings by Wednesday 12 March 2025.
In response to this decision, a GXO spokesperson told Logistics Manager: “We disagree with the CMA’s initial assessment that GXO’s acquisition of Wincanton is likely to reduce competition in the supply of dedicated warehousing services to UK grocers.
“The CMA has found no competition concerns with the vast majority of the Wincanton business. Its focus is limited to a very small group of large and sophisticated companies, which will represent less than 10% of Wincanton revenue.
“This assessment is disproportionate for a business whose total revenue in 2024 exceeded £1.4 billion and does not accurately reflect the totality of evidence presented. These companies have substantial pricing power, demonstrated ability to do this work themselves and the choice of a wide range of logistics players that are more than capable of servicing their needs.
“GXO and Wincanton are a pro-growth combination that will deliver efficiencies for UK businesses, reduce the overall cost to serve UK consumers and help make the logistics sector more effective and resilient. Further, there is no cost impact to UK customers or consumers from the transaction being approved in full.
“GXO has a long legacy of outstanding performance for customers in the UK and we believe the case for unconditional clearance is strong. We will present our response to the CMA at our upcoming hearing in March and continue to work towards full clearance of the transaction by the end of April.”
