The Competition and Markets Authority (CMA) has found that GXO’s purchase of Wincanton could “raise costs” and “reduce choice” for supermarkets.

The CMA independent inquiry group’s initial assessment found that the merger could reduce competition in the supply of dedicated warehouse services to grocery customers in the UK.

Logistics provider GXO completed its acquisition of Wincanton last April in a move CEO Malcolm Wilson said would allow it to “provide a wider range of services to new and existing customers across geographies – and accelerate our long-term growth trajectory”.

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GXO and Wincanton are currently two of the three suppliers of dedicated warehousing services used by grocers in the UK. The CMA did consider that some alternatives would remain for supermarket customers, including switching to the third supplier, DHL, while some could switch certain activities to their own in-house warehouses.

However, the assessment found that these remaining alternatives “would not be sufficient to prevent fees rising” and that the deal could “raise costs for grocers that rely on dedicated warehousing services as part of their logistics”.

Independent inquiry group chair Richard Feasey 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.”