GXO's takeover of Wincanton could 'reduce choice for supermarkets', says CMA

The Competition and Markets Authority said on Wednesday that GXO's takeover of Wincanton would likely reduce competition and drive costs for supermarkets higher.

The watchdog published its initial assessment of the £762.0m deal following a year-long investigation, noting that GXO and Wincanton were currently two of three UK suppliers of dedicated warehousing services used by grocers.

The CMA's initial assessment was that the remaining alternatives "would not be sufficient" to prevent fees rising and that the deal "could raise costs for grocers".

Richard Feasy, chair of the independent inquiry group, said: "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 GXO spokesperson said: "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 £1.4bn 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.

"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."

Reporting by Iain Gilbert at Sharecast.com