Logistics firm GXO’s takeover of Wincanton is likely to reduce competition and bump up costs for supermarkets stocking up shelves, according to the UK’s competition watchdog.

The Competition and Markets Authority (CMA) on Wednesday published its initial assessment into the £762m deal following a year-long investigation.

The regulator noted GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK.

While supermarket customers could switch to DHL, the third supplier, its initial assessment is that the “remaining alternatives would not be sufficient to prevent fees rising and that the deal could raise costs for grocers.”

Richard Feasy, 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. “

He added: “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.”