The Competition and Markets Authority (CMA) is calling on interested parties to comment on two remedies that GXO has proposed to ensure its acquisition of Wincanton does not reduce competition in grocery warehousing in the UK.
Interested parties have until next week (18 March) to comment on the two proposed solutions offered by GXO.
GXO’s preferred remedy is a 3PL sponsorship deal which would fund new logistics providers and maintain contract terms for supermarkets. The second solution is to sell off part of Wincanton’s business to a competitor, ahead of the regulator’s final decision in April 2025.
GXO favours its 3PL Sponsorship Remedy. This would see the company establish a sponsorship fund for each grocery retailer currently serviced by GXO or Wincanton, which would support the entry or expansion of new third-party logistics providers (3PLs) into the market, to ensure continued competition.
The remedy aso includes contract term guarantees, which would allow grocery customers to maintain existing contract terms, if they choose.
It also involves the preservation of the terms for current customers and their extension to new contracts. GXO has indicated that this is its preferred remedy.
The second proposed remedy is divestiture. This solution would see GXO selling off parts of Wincanton’s dedicated warehousing services for grocery customers to a suitable buyer approved by the CMA.
It would also include transferring certain customer contracts, necessary assets, and key personnel with relevant expertise to the buyer, ensuring the continued provision of services.
The CMA is now calling for comment on GXO proposed two solutions.
This is the latest development in GXO’s battle to acquire Wincanton, which was halted in its tracks in November last year when the CMA raised concerns that the acquisition could reduce competition in dedicated warehousing services for UK grocery retailers.
Last month an independent inquiry group, set up by the CMA to carry out an in-depth investigation into the merger after its initial investigation, concluded the merger is ” likely” to reduce competition in the supply of dedicated warehousing services to grocery customers in the UK.
Announcing the group’s findings at the time, 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.“
A GXO spokesperson said: “We are pleased that the Competition and Markets Authority’s interim report found no competition concerns with the vast majority of the Wincanton business and we continue to work towards full clearance of the transaction.
“As required by the CMA process, we have in parallel filed a remedy proposal which addresses the CMA’s concerns which are limited to a handful of grocery customers.
“The proposal does not preclude unconditional clearance. If ultimately required, these would be effective and proportionate solutions to address the CMA’s area of concern.
“This a necessary procedural step to ensure we reach a favourable outcome for our customers, colleagues and investors.”
The deadline for interested parties to submit comments on GXO’s two proposed remedies is 5pm on 18 March 2025.
Comments should be provided by email to gxo.wincanton@cma.gov.uk
