GXO and Wincanton are two of the three suppliers of dedicated warehousing services used by grocers in the UK, with the inquiry group concluding that the presence of a third supplier, DHL, would be insufficient to prevent fees rising if the acquisition is cleared.
The Phase 2 investigation was launched after a Phase 1 ruling, published on 1 November 2024, concluded that the transaction could result in the substantial lessening of competition within the mainstream contract logistics services market.
GXO is the world’s largest contract logistics services company and completed the acquisition of British firm Wincanton in April 2024 in a deal worth £762 million. Both companies operate within the fields of grocery retail and food manufacturing.
April decision
The CMA has invited interested parties to respond to the inquiry group’s provisional findings before 12 March 2025. A final decision deadline for the Phase 2 investigation has been set as 30 April 2025, at which point the deal could be blocked.
Explaining the initial assessment, inquiry group chair Richard Feasey 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 hits back
In response, GXO has issued a statement outlining where the firm disagrees with the CMA’s initial assessment.
“The CMA has found no competition concerns with the vast majority of the Wincanton business,” a GXO spokesperson said.
“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.”
The spokesperson added that the combination would be “pro-growth” for the UK economy, while also delivering efficiencies and helping make the logistics sector more resilient.
“There is no cost impact to UK customers or consumers from the transaction being approved in full,” the spokesperson continued.
“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.”
