Sappi Europe CEO Marco Eikelenboom argues that consolidation could help sustain investment and reliable supply in Europe’s shrinking graphic paper market, as the company’s proposed joint venture with UPM faces European Commission scrutiny.
In an opinion article first published by Euractiv and republished by Sappi on September 7, Eikelenboom outlines the industrial rationale for combining the businesses. His central argument is that a production network built for significantly higher demand must adapt if European mills are to remain competitive.
According to figures cited by Eikelenboom, European graphic paper demand fell from more than 40 million tonnes in 2008 to approximately 13 million tonnes in 2025. He cites a projection of just over eight million tonnes by 2030, reflecting the continued shift towards digital communication.
That would still represent a substantial market. The challenge, he argues, is maintaining an economically viable European production base to serve it.
Lower utilisation puts investment under pressure
Eikelenboom links declining demand to a broader investment challenge. When capacity adjustments lag behind market changes, mills operate at lower utilisation rates, weakening efficiency and making maintenance and capital expenditure harder to justify. Over time, delayed decisions can leave individual machines or entire sites vulnerable to closure.
Sappi’s proposed response is to concentrate production at efficient assets, improve utilisation and strengthen the financial resources available for investment. Eikelenboom also points to the costs of energy efficiency, fibre traceability and environmental compliance as continuing demands on European manufacturers.
The planned 50/50 joint venture would bring together UPM Communication Papers and Sappi’s European graphic paper business in an independently operated company. The partners maintain that the combined network would improve operating efficiency and strengthen their capacity to invest.
Industrial benefits face a competition test
The European Commission is examining the proposed transaction’s effects on competition, including whether the benefits advanced by the partners would offset potential harm to customers.
On August 26, it issued a Statement of Objections expressing preliminary concerns that the transaction could lead to higher prices and reduced quality in coated mechanical and coated woodfree papers. The Commission said it was not yet convinced that the claimed efficiencies and other benefits would offset the potential harm to competition.
The Statement of Objections sets out the Commission’s preliminary concerns and does not prejudge its final decision.
UPM said it was reviewing the objections with Sappi and would respond, reiterating its position that the venture would strengthen supply continuity and industry resilience.
Eikelenboom argues that the assessment must consider how much viable production capacity will remain available over time. He also warns that declining European competitiveness could increase customers’ reliance on imports, including from lower-cost Asian producers.
The debate therefore concerns both producers’ capacity to invest and the consequences of consolidation for printers, publishers and other buyers that depend on competitive prices, consistent quality and supplier choice.
Partners prepare for a potential launch
Meanwhile, the companies are preparing the proposed venture’s leadership. On September 8, UPM and Sappi announced their management nominees, selecting Gunnar Eberhardt for CEO and Stephen Blyth for CFO. Both nominations are conditional on regulatory approvals and completion of the transaction.
