The European Commission has reiterated serious concerns about the proposed graphic paper joint venture between UPM and Sappi, as the two companies prepare remedies aimed at addressing issues raised during the EU merger review.
UPM and Sappi said on October 5 that they had received a Letter of Facts from the Commission. Sappi noted that such a letter forms part of the Commission’s ongoing Phase II merger review process.
The Commission has previously said it is concerned that the transaction could give the joint venture sufficient market power to raise prices and reduce customer choice. Its preliminary assessment has focused in particular on coated wood-containing paper, a type of magazine paper, and coated woodfree paper, where it has also raised concerns about potential effects on quality.
The companies are analyzing the Commission’s findings and preparing a response. They also intend to submit proposals for remedies designed to address the concerns raised.
UPM said the parties plan to propose remedies that would not involve divestments. The company also said it disagrees with the Commission’s preliminary assessment.
Both companies continue to support the joint venture, arguing that it would provide a more efficient response to the structural decline of Europe’s graphic paper market.
UPM said European graphic paper demand has fallen by more than half over the past two decades as a result of digitalization and is expected to decline further. Sappi said combining the companies’ complementary assets and capabilities would create a more efficient manufacturing platform, allow capacity to be adjusted in line with demand and help maintain reliable supply to European customers.
These arguments reflect the companies’ position on the proposed transaction. The European Commission has not yet made a final determination.
UPM and Sappi announced the planned joint venture in 2025 and signed a definitive agreement in May 2026. Completion remains subject to regulatory approvals and other closing conditions.
According to UPM, the transaction has already received merger clearance in several jurisdictions, including China, South Africa and the United States.
UPM and Sappi expect a final European Commission decision by the end of 2026 or shortly thereafter, although the timing remains subject to the ongoing Phase II review. If cleared and all other closing conditions are met, the joint venture would begin operating after the transaction closes.
