**London**: The Competition and Markets Authority has begun a Phase 2 inquiry into GXO’s purchase of Wincanton, amid concerns over competition in the UK logistics market that may lead to increased costs and fewer options for supermarkets, with final decisions due by April 2025.
The Competition and Markets Authority (CMA) has launched a Phase 2 investigation into the acquisition of Wincanton by GXO, sparked by concerns regarding competition in the UK’s contract logistics services market. This inquiry follows a Phase 1 ruling announced on 1 November 2024, which suggested that the merger could potentially lead to a substantial lessening of competition, thereby resulting in increased costs and reduced choices for supermarket operators.
GXO, recognised as the world’s largest contract logistics services provider, completed the acquisition of Wincanton in April 2024 in a transaction valued at £762 million. Both firms play significant roles in the grocery retail and food manufacturing sectors in the UK, servicing a market where efficiency and cost management are essential for successful operations.
The inquiry group has indicated that, despite the presence of a third logistics provider, DHL, the competition may not be robust enough to prevent any potential fee increases post-merger. Richard Feasey, chair of the inquiry group, highlighted the importance of contract logistics services in maintaining well-stocked supermarket shelves across the UK. He expressed the concern that the merger could elevate costs and diminish the available options for supermarkets relying on these logistics services.
The CMA has extended an invitation to interested parties to submit their responses to the inquiry group’s provisional findings by 12 March 2025. The final decision regarding the Phase 2 investigation is anticipated by 30 April 2025, which could ultimately result in the deal being blocked.
In response to these developments, GXO has publicly disagreed with the initial assessment by the CMA. A spokesperson for the company noted that the CMA’s concerns were overly focused on a limited segment of the market, which constitutes less than 10% of Wincanton’s overall revenue. The spokesperson argued that the CMA’s view fails to consider the broader landscape of competition and the capabilities of other logistics providers.
Moreover, GXO maintained that the merger would be beneficial for the UK economy, yielding efficiencies and enhancing the resilience of the logistics sector. “There is no cost impact to UK customers or consumers from the transaction being approved in full,” the spokesperson asserted. GXO is preparing to formally respond to the CMA during the upcoming hearing in March, with hopes of achieving full approval for the acquisition by the end of next April.
Source: Noah Wire Services
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