The Competition and Markets Authority (CMA) has put the brakes on the \u00a3762m takeover of logistics firm Wincanton by US giant GXO with the threat of an in-depth investigation into “competition concerns”.<\/p>\n
The CMA already has an interim enforcement order (IEO) in place to prevent the two organisations integrating while the regulator conducts its merger review.<\/p>\n
It has today revealed that its phase 1 investigation has found the deal could reduce competition in the mainstream contract logistics services market.<\/p>\n
The CMA has judged that GXO and Wincanton compete closely, particularly for contracts with large retail customers, and many of the other contract logistics providers are “significantly smaller” or much more narrow in their service offering.<\/p>\n
GXO has five working days to submit proposals to address the CMA\u2019s concerns and the regulator will progress to an in-depth phase two investigation if\u00a0suitable proposals are not submitted.<\/p>\n
Naomi Burgoyne, senior director of mergers at the CMA, said: “Contract logistics services are critical for the flow of goods around the country, reducing delays, and ensuring that products reach their destinations efficiently and reliably. These services are essential for millions of people who rely on timely deliveries or being able to buy products off the shelf.<\/p>\n
“This market is worth \u00a316bn in the UK, and we\u2019re concerned that this merger could reduce competition, resulting in higher costs being passed down to consumers.”<\/p>\n
A GXO spokesperson said: \u201cWe are reviewing the decision and will continue to engage constructively and collaboratively with the CMA to secure a positive outcome.<\/p>\n
\u201cWe strongly believe that the transaction will deliver meaningful benefits for contract logistics customers in the UK, Europe and globally, and will support the UK Government\u2019s objective to drive economic growth by creating a more efficient and effective supply chain.”<\/p>\n