GXO completed the £762m acquisition of Wincanton in April 2024, before an inquiry into the transaction was launched by the Competition and Markets Authority (CMA) in September.
After gathering information from interested parties, the CMA issued an update on 1 November which said that the merger could “result in a substantial lessening of competition”.
As a result, the deal will be referred for a phase 2 investigation, unless the parties offer an acceptable undertaking to address the concerns within five days.
Contract logistics services include distribution, transport, warehousing and other supply chain services, with both firms working extensively with food and drink manufacturing businesses.
The CMA has expressed fears that while GXO will continue to face competition from other logistics providers, many are significantly smaller or focus on specific industries.
Deal could result in ‘higher costs’
Commenting on the decision to move to a phase 2 investigation, senior director of mergers at the CMA, Naomi Burgoyne, said: “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, a spokesperson for GXO said that it remains confident of obtaining regulatory clearance for the deal.
“We are reviewing the decision and will continue to engage constructively and collaboratively with the CMA to secure a positive outcome," they said.
“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."
In other news, a man has been arrested in connection with the theft of 22 tonnes of cheese from Neal’s Yard Dairy.
