EU Opens In-Depth Probe Into UPM–Sappi Joint Venture Over Competition Concerns

The European Commission has launched an in-depth investigation into the proposed joint venture between UPM-Kymmene Corporation and Sappi Limited, citing concerns that the deal could significantly reduce competition in key paper markets across the European Economic Area (EEA).

The Commission said its preliminary assessment indicates that the transaction may lead to higher prices, reduced choice, and lower quality in the supply of communication and specialty paper. Communication paper includes products used for newspapers, magazines, books, and office applications, while specialty paper covers uses such as labels and self-adhesive materials.

According to the investigation, UPM and Sappi are the two largest producers of communication paper in the EEA and currently act as close competitors. The proposed joint venture would combine UPM’s communication paper operations in Europe and the United States with Sappi’s European communication paper business and parts of its specialty paper operations, potentially creating the region’s market leader.

The Commission has identified specific concerns in the markets for coated mechanical (CM) magazine paper and wood-free coated (WFC) fine paper, where the merged entity could control a substantial share of production capacity. It also flagged potential competition issues in specialty paper segments, including coated-one-side (C1S) face materials and pressure-sensitive labels, due to possible vertical integration and coordination risks.

The investigation will further examine whether the joint venture could restrict access to key inputs for competing suppliers or enable coordination between the companies’ remaining activities. The Commission will also assess claimed benefits such as cost efficiencies, environmental gains, and improved industry resilience.

The transaction was notified on 19 March 2026. The Commission has until 26 October 2026 to issue a final decision. The opening of the probe does not prejudge the outcome.