REG - Competition and Mkts - Merger Update: GXO / Wincanton

GXO LogisticsAnnouncement

19/02/2025 13:15

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RNS Number : 7218X  Competition and Markets Authority  19 February 2025

CMA publishes interim report in logistics merger

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 UK grocers.

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
(https://www.gov.uk/cma-cases/gxo-slash-wincanton-merger-inquiry) case page.

Notes to Editors:

1.   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.

2.   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.

3.   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.

4.   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.

5.   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.

6.   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.

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

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