Logistics supplier GXO’s purchase of its rival Wincanton would likely reduce competition and raise costs for British supermarkets, according to the UK’s competition regulator.
GXO agreed to acquire Wincanton in April 2024 but the takeover was subject to checks from the Competition & Markets Authority (CMA) given the importance of both companies to British food supply.
In an interim report out on Wednesday, the CMA’s initial assessment concluded the deal is “likely to reduce competition in the supply of dedicated warehousing services to grocery customers in the UK.”
GXO and Wincanton are currently two of the three key suppliers of dedicated warehousing for British supermarkets.
The CMA noted some alternative would remain, such as DHL, while some grocers would be able to utilise more of their own in-house warehouses.
However, it concluded “these remaining alternatives would not be sufficient to prevent fees rising and the deal could raise costs for grocers that rely on dedicated warehousing services as part of their logistics.”
GXO disagreed with the CMA’s assessment.
“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,” it said.
GXO argued the assessment is “disproportionate” given its total revenue exceeded £1.4bn last year and “does not accurately reflect the totality of evidence presented”.
The CMA is under pressure from ministers to reduce barriers hindering business and refocus their efforts on promoting growth.
Last month, the government sacked former chair Marcus Bokkerink and replaced him with former boss of Amazon UK Doug Gurr, after Bokkerink failed to convince ministers he was sufficiently focused on growth.
GXO said its merger with Wincanton is 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”.
The CMA has invited any interested parties to respond to the provisional findings by 12 March.
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