• Swindon & Wiltshire M&A, deals
• Thursday February 20 2025
• Author Name: Peter Davison

Competition watchdog applies the brakes to logistics firm takeover

Government watchdog the Competition and Markets Authority has applied the brakes to a £762 million takeover of Chippenham-based logistics firm Wincanton, saying the deal could reduce competition and ultimately increase prices in supermarkets.

US-based GXO completed the purchase of Wincanton in April last year. GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK.

Wincanton’s customers include Waitrose, M&S, Co-op, and Asda.

The CMA’s independent inquiry group found that costs could increase for grocers that rely on dedicated warehousing services as part of their logistics – and those costs would likely be passed on to customers.

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 has invited interested parties to respond by March 12, but GXO wasted no time in issuing a rebuttal.

“The CMA has found no competition concerns with the vast majority of the Wincanton business. Its focus is limited to a very small group of large and sophisticated companies, which will represent less than 10 per cent of Wincanton revenue,” said the firm in a statement.

“This assessment is disproportionate for a business whose total revenue in 2024 exceeded £1.4bn and does not accurately reflect the totality of evidence presented.

“We disagree with the CMA’s initial assessment that GXO’s acquisition of Wincanton is likely to reduce competition in the supply of dedicated warehousing services to UK grocers.

“These companies have substantial pricing power, demonstrated ability to do this work themselves and the choice of a wide range of logistics players that are more than capable of servicing their needs.

“GXO and Wincanton are a pro-growth combination that will deliver efficiencies for UK businesses, reduce the overall cost to serve UK consumers and help make the logistics sector more effective and resilient.

“Further, there is no cost impact to UK customers or consumers from the transaction being approved in full.

“GXO has a long legacy of outstanding performance for customers in the UK and we believe the case for unconditional clearance is strong.

“We will present our response to the CMA at our upcoming hearing in March and continue to work towards full clearance of the transaction by the end of April.”