News / UK competition watchdog issues objections to GXO's $1bn Wincanton buy

GXO’s tabled £960m ($1.2bn) takeover of UK contract logistics operator Wincanton was thrown into doubt today after the UK regulators issued provisional findings that suggested the deal would likely “reduce competition in the supply of dedicated warehousing services to grocery customers in the UK”.

Presenting its initial conclusions from its second phase analysis of the deal, the Competition and Markets Authority (CMA) said there were only three contract logistics suppliers to the UK’s supermarkets – GXO, Wincanton and DHL Supply Chain – and that the takeover “could raise costs for grocers that rely on dedicated warehousing services as part of their logistics”.

“The inquiry group considers that some alternatives would remain for supermarket customers, in particular they could switch to the third supplier, DHL, and some could switch some of their activities to their own in-house warehouses,” it said, but added these alternatives would not be sufficient to prevent fees rising.

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,” he explained.

In response, a GXO spokesperson urged the CMA to consider the wider aspects of the deal.

“We disagree with the CMA’s initial assessment. 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.”

The CMA is inviting parties to submit further comments until 12 March, with a hearing scheduled for later next month. The statutory deadline for a final decision is 30 April.

Its spokesperson added: “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.”