BRUSSELS, April 28, 2026 — The European Commission has opened an in-depth (Phase II) investigation into the proposed joint venture between UPM-Kymmene Corporation and Sappi Limited, citing concerns that the deal could significantly reduce competition in several European paper markets.
The investigation will assess whether the proposed combination of the companies’ communication paper operations could lead to higher prices, reduced choice or lower quality for customers in the European Economic Area (EEA).
Concerns over key paper markets
The proposed joint venture would combine UPM’s communication paper business in Europe and the United States with Sappi’s European communication paper operations and parts of its specialty paper business.
The Commission said preliminary findings indicate potential competition concerns in several markets, particularly:
- Magazine paper, especially coated mechanical (CM) paper
- Fine paper, particularly wood-free coated (WFC) paper
Both companies are among the largest suppliers of communication paper in the EEA and are currently close competitors in these segments. According to the Commission, the joint venture could control a substantial share of production capacity in these markets.
Regulators are concerned the transaction could lead to reduced production capacity, higher prices and lower quality for customers such as printers and publishers.
Additional vertical and coordination risks
The Commission is also examining possible competition issues in specialty paper markets, including:
- Coated one-side (C1S) face material, used in label production
- Pressure-sensitive labels (PSL)
The authority noted that both companies are important suppliers of C1S face material and would continue operating in that market alongside the joint venture. This could potentially allow coordination between the companies after the transaction.
In addition, because C1S face material is a key input for pressure-sensitive labels, the Commission will investigate whether the joint venture could restrict competitors’ access to this input, potentially disadvantaging rival PSL producers.
Next steps
The proposed transaction was notified to the Commission on 19 March 2026. The authority now has 90 working days, until 26 October 2026, to reach a final decision under the EU Merger Regulation.
During the Phase II review, the Commission will also evaluate the parties’ claims that the transaction would generate cost efficiencies, environmental benefits and greater resilience for Europe’s paper industry.
The opening of an in-depth investigation does not prejudge the outcome of the case.
Source: https://ec.europa.eu/commission/presscorner/detail/en/ip_26_913
