European Commission raises objections over proposed UPM-Sappi joint venture
The European Commission has informed UPM-Kymmene Corporation (UPM) and Sappi Limited (Sappi) of its preliminary view that their proposed joint venture could restrict competition in several communication paper markets. These paper grades are widely used for printed products such as magazines, books and promotional materials.
UPM and Sappi are the two largest manufacturers of communication paper products in the European Economic Area (EEA). The proposed joint venture would combine UPM’s communication paper business in Europe and the United States with Sappi’s communication paper operations in Europe, together with part of Sappi’s speciality paper business and other related activities. The transaction would create the market leader for communication papers in the EEA.
The Commission is particularly concerned that the joint venture could acquire sufficient market power to increase prices and reduce the range of alternatives available to customers.
Commission’s Statement of Objections
The European Commission opened an in-depth investigation into the proposed transaction on 28 April 2026 to assess whether the combination of UPM and Sappi’s activities could significantly reduce competition in certain communication paper markets. The investigation has focused in particular on magazine paper and coated woodfree paper in the EEA, the United Kingdom and Switzerland. These paper grades are used for a wide range of printed products, including magazines, books and promotional materials.
During the investigation, the Commission carried out an extensive analysis of the markets potentially affected by the transaction. This included reviewing internal documents provided by UPM and Sappi and gathering information, data and views from customers and competitors.
On the basis of the investigation conducted to date, the Commission expressed concerns that the proposed joint venture could acquire market power enabling it to increase prices and reduce quality to the detriment of customers purchasing coated mechanical paper, a type of magazine paper, and coated woodfree paper.
The Commission also stated that it is currently not convinced that integrating the companies’ relevant activities would generate sufficient benefits to offset the potential negative effects on competition. The efficiencies under consideration include possible cost savings, as well as environmental benefits and improvements in supply resilience.
The Statement of Objections represents a formal procedural step in the Commission’s investigation. Through this document, the companies concerned are formally informed in writing of the competition concerns identified by the authority. The Commission stressed that the issuance of a Statement of Objections does not prejudge the final outcome of the investigation. UPM and Sappi can now respond to the Commission’s objections, consult the Commission’s case file and request an oral hearing.
UPM and Sappi
UPM, headquartered in Finland, is a global material solutions company active in the development, production and marketing of a broad range of products and solutions, including paper, pulp, electricity, label materials, sawn timber and wood panel products, as well as biochemicals, biomass and plywood solutions.
Sappi, headquartered in South Africa, is a global manufacturer of materials based on renewable wood-fibre resources. Its activities include the supply of raw materials such as pulp and biomaterials, as well as end-use products including communication, speciality and packaging papers.
The proposed joint venture would bring together two of the leading players in the European graphic and communication paper industry. The transaction was formally notified to the European Commission on 19 March 2026. Following its preliminary review, the Commission opened an in-depth Phase II investigation on 28 April 2026. The Commission has until 11 November 2026 to adopt its final decision on the proposed transaction.
Under the EU Merger Regulation, the European Commission is responsible for assessing mergers and acquisitions involving companies whose turnover exceeds certain thresholds and for preventing concentrations that could significantly impede effective competition within the European Economic Area or a substantial part of it.
Most transactions notified to the Commission do not raise competition concerns and are cleared following the initial review. Once a transaction has been notified, the Commission generally has 25 working days to decide whether to approve it during Phase I or open a more detailed Phase II investigation.
Alongside the UPM-Sappi transaction, the Commission is currently conducting two other Phase II merger investigations: the proposed acquisition of Anglo American’s nickel business by MMG and the proposed merger between Saipem and Subsea7.
