The UK Competition and Markets Authority (CMA) has given the green light to GXO Logistics’ acquisition of Wincanton after the former agreed to divest Wincanton’s grocery warehousing operations.
This condition was set to mitigate any competitive concerns, allowing the acquisition to move forward.
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The acquisition is set to broaden GXO’s footprint in key growth sectors, while significantly augmenting services provided to customers in the UK and Ireland.
In its conclusive assessment, the independent inquiry group of the CMA determined that the merger would likely diminish competition in the provision of dedicated warehousing services to grocery clients in the UK.
This reduction in competition could lead to increased costs for grocers, which might then be transferred to consumers, resulting in higher prices at checkout.
Concerns were raised that the merger could stifle innovation and lower service levels within the market, affecting the efficiency of product delivery to supermarket shelves.
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By GlobalDataTo address these concerns, GXO has consented to sell Wincanton’s specialised grocery warehousing operations to a buyer approved by the CMA.
The inquiry group has expressed satisfaction that this solution adequately mitigates the competition issues, clearing the path for the merger.
Independent inquiry group chair Richard Feasey stated: “Warehousing services play a crucial role in ensuring the seamless movement of goods across the UK, allowing our supermarkets to maintain well-stocked shelves with thousands of items we buy every day.
“Healthy competition in this market is key to managing costs for supermarkets and grocers and improving their performance – ultimately ensuring consumers pay the best possible prices for products in stores. We are pleased to approve this deal, having worked with GXO and Wincanton to secure the necessary changes to the deal which resolve our concerns.”
GXO anticipates annual net cost synergies of £45m (before tax) at a full run-rate by the third year following the integration.
