Home / Business and Economy / EU Probes Paper Deal for Price Hikes
EU Probes Paper Deal for Price Hikes
29 Apr
Summary
- EU antitrust regulators opened an investigation into a proposed paper joint venture.
- The deal between UPM and Sappi may lead to higher prices and lower quality paper.
- Companies may need to sell assets to address competition concerns.
European Union antitrust regulators are investigating a proposed paper joint venture between UPM-Kymmene and Sappi. The 1.42-billion-euro deal aims to combine their European graphic paper businesses.
The European Commission expressed concerns that the venture could significantly reduce competition in the coated mechanical (CM) and wood free coated (WFC) paper markets. They warned that rivals might not be able to compensate for any price increases proposed by the joint venture.
As a result, the transaction could lead to higher prices and a decrease in the quality of CM and WFC paper for printers and publishers. To gain approval, UPM and Sappi may need to divest certain assets or offer other concessions.
UPM stated it is engaging constructively with the EU watchdog and believes the joint venture will enhance the resilience of European graphic paper supply in declining markets. The European Commission is expected to make a decision on the merger by October 26.
