EU competition concerns cloud UPM and Sappi’s planned paper joint venture
The European Commission continues to have serious concerns about UPM and Sappi’s proposed graphic paper joint venture. The companies are preparing a response and plan to offer commitments to address those concerns, but have ruled out selling businesses or assets as part of their proposals.
UPM and Sappi have received a letter from the European Commission restating its serious concerns about the proposed transaction. UPM disclosed the development in a stock exchange release on 5 October. The Commission’s review remains ongoing.
UPM disagrees with the Commission’s preliminary assessment. The company argues that the joint venture would strengthen the European graphic paper industry’s competitiveness and ability to adapt to declining demand.
The companies plan to propose commitments to address the Commission’s competition concerns. UPM has not disclosed what these would involve, but said they would not include divestments — the sale of businesses or assets.
UPM points to declining paper demand
According to UPM, demand for graphic paper in Europe has more than halved over the past two decades as a result of digitalisation. Demand is expected to decline further in the coming years.
The company argues that the joint venture would allow production capacity to be adjusted to the shrinking market in a more orderly way. UPM says it would also improve efficiency and maintain reliable supplies of European-made paper.
Without the transaction, European paper producers would face increasing pressure, UPM warns. The company says further capacity closures could narrow the range of paper grades available and increase customers’ dependence on imports.
Decision expected around the end of the year
UPM and Sappi announced plans for the joint venture in 2025 and signed the definitive agreement in May 2026.
According to UPM, the transaction has already received regulatory approval in most jurisdictions reviewing it, including China, South Africa and the United States. The European Commission’s final decision is expected by the end of 2026 or shortly afterwards.
The joint venture would begin operating once the necessary approvals have been secured and the other conditions for completing the transaction have been met.
