Merger Update; GXO / Wincanton

Logistics deal could raise prices for business customers in the UK

CMA's Phase 1 investigation has found GXO's purchase of Wincanton could reduce competition in the mainstream contract logistics services market.

Following a Phase 1 investigation, the Competition and Markets Authority (CMA) has found that GXO Logistics' (GXO) completed purchase of Wincanton PLC could reduce competition in the supply of mainstream contract logistics services in the UK.

Contract logistics services include distribution, transport, warehousing and other supply chain services. GXO is the world's largest contract logistics services company, and Wincanton is a British supplier of these services. Both companies supply mainstream contract logistics services to business customers in both retail (such as groceries, fashion and apparel) and non-retail (such as manufacturing and construction) sectors.

The CMA's investigation found that GXO and Wincanton compete closely, particularly for contracts with large retail customers. 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). Although some businesses have the option to bring services in-house if contract logistics suppliers do not offer good value, the ability to do this varies by customer.

The CMA 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.

GXO has 5 working days to submit proposals to address the CMA's concerns. If suitable proposals are not submitted, the CMA will progress to an in-depth Phase 2 investigation.

Naomi Burgoyne, Senior Director of Mergers at the CMA, 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."                                                                                                                                                                                     

More information on this case is available on the GXO / Wincanton case page.

Notes to Editors:

1.   GXO announced their 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 two organisations integrating while the CMA conducts its merger review.

2.   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.

3.   CLS in the retail market 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 in the non-retail market involves the provision of services to customers whose products or services are not consumer-facing, such as automotive, construction, energy and manufacturing businesses.

4.   The CMA found 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 grocery retail customers.

5.   Guidance on the CMA's mergers jurisdiction and procedure can be read here.

6.   All media enquiries should be directed to the CMA press office by email on press@cma.gov.uk or by phone on 020 3738 6460.