The European Commission has conditionally approved (25 January) International Paper’s €X billion acquisition of UK-based DS Smith, requiring the divestment of five manufacturing plants across Europe to address competition concerns.
The decision follows a detailed investigation under the EU Merger Regulation, which found the initial transaction would have significantly reduced competition in several local markets for corrugated sheets and cases, including:
- Northern and Western Portugal for corrugated sheets,
- Northeast Spain for heavy-duty corrugated sheets, and
- Northwest France for corrugated cases.
The Commission concluded that the deal, as originally proposed, would have led to higher market concentration, limiting alternative suppliers and increasing costs for businesses and consumers.
Conditions for Approval
To resolve these issues, International Paper agreed to divest:
- Three plants in Normandy, France (Saint-Amand-Villages, Mortagne, and Cabourg),
- One plant in Ovar, Portugal, and
- One plant in Bilbao, Spain.
These divestments fully eliminate overlaps in the affected markets, ensuring continued competition and preventing price increases. The Commission will supervise the implementation of these commitments through an independent trustee and will approve the eventual buyers of the divested facilities.
Market Implications
Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, stated:
“As initially notified, this deal would have increased concentration in local markets for corrugated sheets and cases, likely leading to higher costs for businesses and consumers. The divestments address all concerns, ensuring these markets remain competitive.”
The conditional approval highlights the Commission’s role in safeguarding market competition and protecting consumers in the European Economic Area.
About the Companies
International Paper, headquartered in the United States, is a global leader in renewable fibre-based packaging and recycling. DS Smith, based in the UK, specializes in sustainable packaging with operations focused in Europe and North America.
The transaction was notified on November 25, 2024, and approved following a 35-working-day Phase I review. Further details are available in the Commission’s public case register under case number M.11564.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_322
