GXO purchase of Wincanton ‘likely to reduce competition’

GXO’s purchase of Wincanton is likely to reduce competition in the supply of dedicated warehousing services to grocery customers in the UK.

That’s according to an interim report from the Competition and Markets Authority (CMA), which claims that the acquisition could raise costs and reduce choice for supermarkets.

The sale of Wincanton to US giant GXO Logistics was completed for £762 million in April 2024, at which time the CMA issued an initial enforcement order.

The CMA’s ‘phase one’ investigation was completed in November, when it suggested that the merger may be expected to result in a “substantial lessening of competition” in the UK. 

GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK. 

The inquiry has found that some alternatives would remain for supermarket customers following the transaction, in particular they could switch to DHL and some could switch to their own in-house warehouses. 

The inquiry group’s initial assessment, however, is 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’s 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.”

A spokesperson for GXO told Fleet News: “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.”

The spokesperson added: “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.”

The CMA is asking any interested parties to respond to these provisional findings by no later than 5pm on Wednesday, March 12, 2025.