The Competition and Markets Authority (CMA) is scrutinising GXO’s purchase of Wincanton due to potential competition issues.
- This acquisition could hinder competition and increase costs in the contract logistics sector.
- GXO’s deal with Wincanton, valued at £760 million, was completed in April.
- An interim enforcement order is in place, preventing GXO and Wincanton from integrating.
- GXO has five days to propose solutions to CMA’s concerns before a potential in-depth investigation.
The recent acquisition of Wincanton by GXO Logistics has caught the attention of the Competition and Markets Authority (CMA) due to concerns over decreased competition in the contract logistics sector. The CMA’s phase 1 investigation suggests that such a merger might lead to increased operational costs for businesses reliant on these logistics services.
Both GXO and Wincanton are pivotal players in the contract logistics market, particularly servicing large retail clients in the UK. While GXO continues to face competition from other third-party logistic providers, the CMA notes that many competitors are smaller or specialise in niche areas, thus amplifying their concerns.
The CMA maintains that the merger could result in higher expenses being transferred to consumers, impacting the vast £16 billion UK logistics market. This sector’s health is essential as it underpins timely deliveries and availability of goods across the nation.
Naomi Burgoyne, CMA’s senior director of mergers, emphasised the critical nature of contract logistics services in supporting the country’s supply chain. The authority has clearly highlighted its readiness to probe deeper into the matter if GXO doesn’t provide satisfactory amendments.
GXO, having finalised the deal in April, remains unable to merge operations with Wincanton under the interim enforcement order. The company has expressed its belief in the prospective benefits of the deal and its intention to comply with regulatory requirements to achieve approval.
The CMA’s investigation outcome could either further delay or entirely halt the merger, depending on GXO’s forthcoming actions. GXO is required to address the outlined concerns within five working days to avoid an in-depth phase 2 investigation.
The future of GXO’s acquisition of Wincanton hangs in balance as regulatory scrutiny intensifies, necessitating prompt resolution.
