CMA publishes interim report in logistics merger
Source: gov.uk (2025-02-19)

CMA independent inquiry group’s initial assessment is that GXO’s purchase of Wincanton is likely to reduce competition in the supply of dedicated warehousing services to UK grocers.

The Competition and Markets Authority (CMA) independent inquiry group’s initial assessment is that GXO’s purchase of Wincanton is likely to reduce competition in the supply of dedicated warehousing services to grocery customers in the UK.

Logistics, including warehousing, is essential to the operation of supermarkets and many other businesses in the UK. Efficient logistics systems help to lower costs for both businesses and consumers and ensure that products are available in stores when needed.

GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK. The inquiry group considers that some alternatives would remain for supermarket customers following the transaction, in particular they could switch to the third supplier, DHL, and some could switch some of their activities 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 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.

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

For more information, visit the GXO / Wincanton (https://www.gov.uk/cma-cases/gxo-slash-wincanton-merger-inquiry) case page.

Notes to Editors:

GXO announced its deal to acquire Wincanton in February 2024. The deal was then completed in April 2024, although an interim enforcement order (IEO) is in place to prevent the 2 organisations integrating while the CMA conducts its merger review.

Contract logistics services (CLS) encompass a range of B2B and B2C supply chain-related services, which enable businesses to supply goods to customers and consumers. These services include transport and distribution, warehousing and additional value-added services.

The interim report contains the inquiry group’s provisional findings on whether the merger gives rise, or may be expected to give rise, to a substantial lessening of competition in any market in the UK.

The inquiry group also assessed other areas of CLS including the supply of transport services and shared warehousing. At this stage, the inquiry group has not found significant competition concerns in relation to those markets.

CLS to retail customers includes the provision of services to customers whose products are consumer-facing such as groceries or fashion and apparel. This includes products that are ordered online, products that sell quickly and have a short shelf life due to high consumer demand or perishability (known as Fast Moving Consumer Goods), and products that require temperature-controlled logistic services (including certain food and drink products). CLS to non-retail customers involves the provision of services to customers whose products and services are not consumer-facing, such as automotive, construction, energy and manufacturing businesses.

The inquiry group analysed evidence which showed that customers often prioritise reputation, reliability and track record when choosing CLS providers. Despite there being other alternatives in the CLS market, GXO and Wincanton (alongside DHL) are regarded as leading suppliers of mainstream CLS services, particularly for warehousing for grocery retail customers. The evidence shows that customers’ preference for suppliers with a track record creates a barrier to entry and expansion for smaller providers.

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