CMA review casts doubt over GXO’s acquisition of Wincanton

An update from the Competition and Markets Authority (CMA) on 1 November 2024 confirmed that GXO’s acquisition of logistics service provider Wincanton ‘may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom’.

Confirmation of the merger came in April 2024, although the two companies have continued to operate independently of each other since, and will continue to do so until the conclusion of the CMA’s review.

Elaborating on its decision, the CMA said that it found that the evidence suggested that the acquisition ‘gives rise to a realistic prospect of a substantial lessening of competition as a result of horizontal unilateral effects in the supply of mainstream contract logistics services in the UK’.

The investigation found that GXO and Wincanton compete closely, particularly for contracts with large retail customers. The CMA noted that ‘although GXO will continue to face competition from other contract logistics providers, many of these are significantly smaller, or focus on specific industries or types of logistics services, such as transport’.

The CMA has said that it is therefore ‘concerned that the deal could raise costs for businesses that rely on contract logistics suppliers to move goods around the UK and for other supply chain activities’.

The GXO-Wincanton merger will be referred for an ‘in-depth, Phase 2 investigation unless the parties offer an acceptable undertaking to address these competition concerns’. GXO has been given five working days from 1 November to submit proposals to address the CMA’s concerns if a Phase 2 investigation is to be avoided.

Naomi Burgoyne, senior director of mergers at the CMA, commented: “Contract logistics services are critical for the flow of goods around the country, reducing delays and ensuring that products reach their destinations efficiently and reliably. These services are essential for millions of people who rely on timely deliveries or being able to buy products off the shelf.

“This market is worth £16 billion in the UK, and we’re concerned that this merger could reduce competition, resulting in higher costs being passed down to consumers. We consider that these competition concerns warrant an in-depth Phase 2 investigation, unless GXO offers solutions which address them.”

In response to the CMA’s decision, a GXO spokesperson told Logistics Manager: “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 not only took home a trophy at this year’s Supply Chain Excellence Awards in the UK (full list of winners here), but also at the first-ever Supply Chain Excellence Awards USA (full list of winners here), held in October 2024 in Miami, Florida. The Supply Chain Excellence Awards will continue to expand globally in 2025, with an MEA edition coming to Abu Dhabi and an APAC edition coming to Singapore.

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