The Competition and Markets Authority (CMA) is preparing to launch an ‘in-depth’ investigation into the market impact of the acquisition of Wincanton by GXO.
The sale of Wincanton to US giant GXO Logistics was completed for £762 million in April, at which time the CMA issued an initial enforcement order.
The CMA’s ‘phase one’ investigation has now been completed and it has decided, on the evidence currently available to it, that “it is or may be the case that this merger may be expected to result in a substantial lessening of competition” in the UK.
It added: “This merger will be referred for an in-depth, phase two investigation unless the parties offer an acceptable undertaking to address these competition concerns.”
The report from the CMA says that the merger would materially increase the level of concentration in the market, with the merged entity and its two largest rivals accounting for a significant proportion of supply.
The joint enterprise would become the largest mainstream contract logistics services provider with a 20-30% share of supply, followed by DHL (10-20%), Culina (10-20%) and a tail of much smaller providers, with less than 5% of the market.
A spokesperson from GXO said: “We are reviewing the decision and will continue to engage constructively and collaboratively with the CMA to secure a positive outcome.
“We 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’s objective to drive economic growth by creating a more efficient and effective supply chain.
“The UK logistics market is highly competitive, and competition will remain robust for years to come.
“We remain confident in obtaining regulatory clearance and look forward to beginning to integrate our two great businesses.”
GXO and Wincanton have until November 8, to offer an undertaking which might be accepted by the CMA to address the substantial lessening of competition.
If no such undertaking is offered, or the CMA decides that any undertaking offered is insufficient to remedy its concerns, then the CMA will refer the merger for the in-depth, phase two investigation.
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