The UK’s Competition and Markets Authority (CMA) has raised concerns that the recent acquisition of Wincanton PLC by GXO Logistics could reduce competition in the contract logistics services (CLS) market, potentially increasing costs for business customers. Following a Phase 1 investigation, the CMA said the merger could reduce competition in the sector, particularly for UK businesses that rely on logistics providers for transport, warehousing and other supply chain functions.
GXO, the world’s largest contract logistics company, completed its acquisition of UK-based Wincanton in April. However, an interim enforcement order remains in place to prevent the two companies from fully integrating while the CMA’s review is ongoing. The regulator found that GXO and Wincanton are close competitors in the CLS market, particularly for large retail customers, including the food and clothing sectors. Although there are other CLS providers in the UK, the CMA noted that many of these companies are either smaller or focus on specific areas of logistics, potentially limiting competitive options.
“The CMA is 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 agency said.
The market for contract logistics services in the UK is valued at approximately £16 billion. Naomi Burgoyne, Senior Director of Mergers at the CMA, highlighted the essential role of CLS in maintaining the flow of goods.
“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,” she said, adding that competition in this market is necessary to prevent potential cost increases from impacting consumers.
On Friday 1 November, GXO was given five working days to propose solutions to address the CMA’s concerns. If appropriate remedies are not forthcoming, the regulator may open a wider Phase 2 investigation.