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 (CLS) 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.”
