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 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.
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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.
