CMA warns GXO-Wincanton deal ‘likely to reduce competition’
The Competition and Markets Authority (CMA) has said GXO’s takeover of Wincanton “is likely to reduce competition”.
The £762m deal was agreed a year ago but there is an interim enforcement order in place to prevent the two companies integrating while the CMA conducts its investigation.
An interim report by the CMA’s independent inquiry group found there are competition risks “in the supply of dedicated warehousing services to grocery customers in the UK”.
Richard Feasey, chair of the 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.”
GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK. The inquiry group “considers that some alternatives would remain for supermarket customers following the transaction, in particular they could switch to the third supplier, DHL, and some could switch some of their activities to their own in-house warehouses”.
However it believes these options “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.
A GXO spokesperson said: “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 £1.4bn 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.”
