The European Commission has opened an in-depth investigation into plans by paper makers UPM and Sappi to create a joint venture, citing concerns it could reduce competition in parts of the European Economic Area.
The Commission is assessing the deal under the EU Merger Regulation, which allows it to review mergers above certain turnover thresholds and block those that would significantly impede competition in the EEA, the EU executive said on Tuesday.
UPM and Sappi are the two largest manufacturers of communication paper in the EEA, and the proposed joint venture would combine UPM’s communication paper business in Europe and the US with Sappi’s communication paper business in Europe and part of its specialty paper business.
Communication paper includes paper used for newspapers, magazines, books and office printing, while specialty paper covers products for specific uses such as self-adhesive paper and labels.
The Commission’s initial review found potential competition concerns in magazine paper — particularly coated mechanical paper — and fine paper — particularly wood free coated paper — in the EEA.
It said UPM and Sappi are each other’s main rivals in those segments and that the joint venture would control a significant portion of production capacity in the EEA.
Rivals may not be able, or have the incentive, to offset any price rises by the joint venture.
The Commission said it is concerned the deal could lead to reduced production capacity, higher prices, and lower quality for coated mechanical and wood free coated paper, affecting customers such as printers and publishers.
Labels and specialty paper also under scrutiny
The Commission also raised concerns in certain specialty paper markets, focusing on coated-one-side paper-based face material — used as an input in some label products — and pressure-sensitive labels.
UPM and Sappi are close competitors in coated-one-side face material, and the Commission said it will examine whether the deal could reduce competition or enable the companies to coordinate their activities after the transaction.
It will also examine whether the joint venture could restrict competing suppliers of pressure-sensitive labels from accessing coated-one-side face material, which is a key input.
The transaction was notified to the Commission on 19 March 2026, and it has 90 working days — until 26 October 2026 — to take a decision, it said, adding that opening an in-depth investigation does not prejudge the outcome.
