The Competition and Markets Authority (CMA) has released an interim report from its independent inquiry group, suggesting that the merger between GXO and Wincanton could significantly reduce competition in the dedicated warehousing services sector for grocery customers in the UK.

Logistics, particularly warehousing, is crucial for the efficient operation of supermarkets and other businesses, helping to keep costs low and ensuring product availability. Currently, GXO and Wincanton are two of the three main suppliers of dedicated warehousing services for grocers, with DHL being the third option.

The inquiry group acknowledges that while alternatives exist, such as switching to DHL or utilizing in-house warehouses, these options may not be adequate to prevent potential fee increases. The report warns that the merger could lead to higher costs for grocers who depend on dedicated warehousing services.

Richard Feasey, Chair of the inquiry group, emphasized the importance of contract logistics services in maintaining well-stocked supermarket shelves. He expressed concern that the merger could diminish service options and increase costs for supermarkets, which could ultimately affect consumers.

The CMA is inviting feedback on these provisional findings from interested parties by March 12, 2025. The merger was initially announced in February 2024 and completed in April 2024, but an interim enforcement order is currently in place to prevent integration while the CMA conducts its review.

The interim report also evaluated other areas of contract logistics services, such as transport and shared warehousing, and found no significant competition concerns in those markets at this stage.