CMA delivers first remedies decision under new Phase 2 process

GXO / Wincanton is the first Phase 2 case to involve remedies since the Competition and Markets Authority (CMA) reformed the Phase 2 process in 2024 (see our May 2024 update) and comes at a time of revived emphasis on supporting growth and investment.

What you need to know

• The CMA identified competition concerns in relation to the supply of dedicated warehousing services to grocery customers, with most grocery customers speaking out against the transaction.
• The CMA rejected the hybrid remedy proposed by GXO, but accepted a modified divestment remedy despite third party concerns.
• The CMA clearly continues to have a preference for structural remedies, particularly in cases involving direct competitors. However, the willingness to accept a divestment remedy with complicated carve out arrangements indicates greater pragmatism on the CMA's behalf and the new Phase 2 process now allows greater time to negotiate more complex remedies.

How did we get here?

In April 2024, GXO acquired its UK-based rival Wincanton. Both parties are active in the supply of contract logistics services to a wide-range of customers in the UK, including grocery retailers (supermarkets). Contract logistics services involve operating warehouses (both shared and dedicated) and transport on behalf of customers. The CMA launched a Phase 1 review in September 2024, and in November 2024 referred the transaction for an in-depth Phase 2 review.

In February 2025, the CMA published its Phase 2 Interim Report and provisionally found that the merger raised competition concerns. In particular, the CMA was concerned that supermarkets will face a reduction in choice when acquiring "dedicated warehousing" services. The CMA's analysis showed that DHL was the only credible competitor to the merging parties, and that "self-supply" by the supermarkets was not a viable option for all customers. This is consistent with the fact that five out of eight grocery customers expressed concerns to the CMA regarding the merger.

Whilst the CMA was concerned about supermarkets' choice of dedicated warehousing suppliers, the CMA did not identify competition concerns in relation to: dedicated warehousing services for non-grocery customers (noting it was "finely balanced"), or in relation to shared warehousing or transport services.

In June 2025 the CMA published its Final Report, which confirmed the CMA's provisional findings in relation to the competition issues and required GXO to divest the Wincanton dedicated grocery warehousing services business.

What is the wider context of the Final Report?

The GXO / Wincanton Final Report comes amid changing times for the CMA (see our March 2025 and July 2025 updates).

This is the third case reviewed under the CMA's reformed Phase 2 process and the first case to involve remedies. The new Phase 2 process involves increased engagement with the merging parties and the opportunity for an earlier discussion on remedies. According to the CMA's press release at the time, the purpose of these reforms was, in part, to: "incentivise merging parties to bring forward credible remedies to address concerns at the earliest possible stage".

More generally, the Final Report is published against the backdrop of the UK Government's strategic steer to the CMA to support growth and investment, as well as the publication of the CMA's 'merger charter' and the focus on how the 4Ps of Pace, Predictability, Proportionality and Process should apply to their mergers work.

At the same time, the CMA's approach to behavioral remedies in merger cases has increasingly been viewed as out of line with other competition regulators' more flexible approaches. For example, in August 2023, the CMA blocked the Microsoft / Activision Blizzard merger and rejected behavioural remedies offered by the parties. This was in contrast to the European Commission, which had cleared the merger subject to the parties' proposed behavioural remedies.

However, there have been indications that the CMA may be changing its approach.

• The CMA is currently undertaking a review of its merger process, with a particular focus on the role of behavioral remedies and preserving both pro-competitive efficiencies and relevant customer benefits arising from a merger. The CMA published a call for evidence in March 2025 and is expected to publish revised guidance on its approach to remedies for consultation later in the year (see our March 2025 update).
• In December 2024, the CMA announced it would clear the proposed merger between UK telecoms networks Vodafone and Three, subject to behavioral remedies committing to make significant investment in the rollout of 5G and putting in place short term customer protections.
• In July 2025, the CMA announced that it had accepted undertakings, including a behavioral remedy proposed by the parties, as part of a Phase 1 review in to the Schlumberger / ChampionX transaction. Specifically, the CMA found there was reasonable grounds to believe that a commitment by the parties to continue supplying its pre-existing customers in accordance with pre-merger practice and to license all the essential intellectual property and knowhow to a new rival looking to develop a rival product would be an effective remedy.

The GXO / Wincanton Final Report therefore represents an opportunity to see whether there has been a notable shift in the CMA's approach.

Which remedies did the CMA decide are appropriate?

In response to the CMA's interim report, GXO proposed two potential remedies (one behavioral remedy and one structural remedy), both of which sought to address concerns regarding the supply of dedicated warehousing to supermarket customers. Following feedback from the CMA after the interim report, GXO submitted an updated version of its remedies proposal comprising the following alternative options:

• A carve-out "Divestiture Remedy" involving the divestiture of Wincanton’s dedicated grocery warehousing services business.
• A "Hybrid Remedy", comprising a primary remedy, with both behavioural and structural elements, whereby GXO would provide a financial fund to facilitate the sponsorship of a new entrant through the award of two contracts (the Sponsorship Component). Should the Sponsorship Component not be implemented by the final date for acceptance by the CMA of the undertakings, GXO proposed its Divestiture Remedy as a fallback remedy.

Despite the recent change in the "mood music" surrounding behavioural remedies, the CMA found that the behavioral element of the hybrid remedy was not workable in this case. In particular, it considered that there was significant uncertainty as to whether a third party/customer would be eligible to access the financial sponsorship fund, in which case the implementation of the Divestiture Remedy would be significantly delayed. In addition, the CMA was concerned that the Sponsorship Component, even if it was implemented, would not fully restore pre-merger competition as it was unclear whether the sponsored entrant would have sufficient scale and expertise to develop a track record equivalent to that of Wincanton's pre-merger. This was consistent with the views of grocery customers, who were generally not supportive of the proposed Hybrid Remedy.

Ultimately, the CMA found that GXO's Divestiture Remedy, subject to some modifications, would be an effective remedy. Whilst the CMA was comfortable that GXO's proposed divestment would have a number of suitable purchasers and was capable of being implemented effectively, it (and several third parties) identified a number of potential risks with the proposed scope of the divestment package. For example, the CMA was concerned that an insufficient number of customers would consent to having their contracts transferred, and whether the purchaser would have sufficient time and scale to develop expertise before the contracts are set to be re-tendered. As a result, the CMA required additional enhancements to the remedy in order to mitigate these risks.

Want to know more?

CMA adopts new Phase 2 merger process (3 May 2024) https://www.ashurst.com/en/insights/cma-adopts-new-phase-2-merger-process/

CMA reconsiders approach to merger remedies and publishes Mergers Charter (17 March 2025) https://www.ashurst.com/en/insights/cma-reconsiders-approach-to-merger-remedies-and-publishes-mergers-charter/