By Helena Smolak

Warehouse supplier GXO Logistics' purchase of rival Wincanton would likely reduce competition and raise costs for U.K. grocers, the U.K.'s antitrust regulator said.

The Competition and Markets Authority's initial assessment found that alternatives for U.K. supermarkets--either to switch to a third warehouse supplier, DHL, or to own in-house warehouses-- wouldn't be sufficient to prevent supply cuts and rising logistics fees, it said Wednesday.

The CMA said it has ordered to pause the merger while it conducts its review. Any interesting parties can respond to the provisional findings by March 12, it said.

"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," Richard Feasey, chair of the independent inquiry group said.

GXO disagreed with CMA's assessment. The company will present its response to the CMA at the upcoming hearing in March and continues to work toward full clearance of the transaction by the end of April, a spokesman said.

"GXO and Wincanton are a pro-growth combination that will deliver efficiencies for U.K. businesses, reduce the overall cost to serve U.K. consumers and help make the logistics sector more effective and resilient," the spokesman said. GXO denied that there would be a cost impact to consumers as a result of the transaction.

GXO agreed to buy Wincanton in April. They are two out of three suppliers of dedicated warehousing services used by supermarkets in the U.K.

Write to Helena Smolak at helena.smolak@wsj.com

(END) Dow Jones Newswires

February 19, 2025 08:13 ET (13:13 GMT)

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