The UK government’s Competition and Markets Authority (CMA) is investigating GXO’s acquisition of Wincanton in a move which could see the merger delayed for some months or even prevented, if it is found to be anti-competitive.

Announcing the investigation last week the authority said: ”The CMA is investigating the completed acquisition by GXO Logistics, Inc. of Wincanton Plc.”

A merger usually only qualifies for a CMA investigation if either the business being taken over has a UK annual turnover of at least £70m, or the combined businesses have at least a 25% share of any reasonable market.

The CMA issued an initial enforcement order (IEO) to GXO and Wincanton on 26 April, just three days before the acquisition was sealed.

It stated that the CMA had ”reasonable grounds for suspecting that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in GXO Logistics, Inc. (GXO) and Wincanton Plc (Wincanton) ceasing to be distinct.”

Under the IEO, GXO and Wincanton cannot take any action which might lead to the integration of the two business; transfer the ownership or control of either business or their subsidiaries; and must ensure their respective businesses compete independently in any of the markets affected by the transaction.

The CMA has 40 working days to either clear the transaction or refer it for a Phase 2 investigation.

CMA Phase 2 merger investigations are subject to a strict deadline of 24 weeks, which can be extended by 8 weeks ”where there are special reasons to do so.”

Where the parties accept that a Phase 2 reference will very likely be made, they can request the CMA to fast track the case. If the CMA accepts such a request it will aim to make the reference decision within 10 to 15 working days.

However, Chris Clowes, senior consultant at logistics consultancy Scala, told MT the move was “unlikely to kibosh the acquisition”.

“There will be some instances in specific sectors where there will be concerns,” he added. “Sainsbury’s three-supplier strategy would become two, for example, but there are unlikely to be widespread issues.”

Both GXO and Wincanton have declined to comment.

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