EU Warns UPM-Sappi Joint Venture May Threaten Competition in Print Paper Market
EU Commission Raises Concerns Over Proposed Paper Industry Joint Venture
Background of the Joint Venture
Aug 26 (Reuters) - The EU Commission said on Wednesday it is concerned that a proposed €1.42 billion ($1.66 billion) paper joint venture between Finland's UPM-Kymmene and South Africa-listed Sappi could restrict competition.
Potential Impact on Market Competition
Market Power and Price Effects
The Commission said the joint venture would acquire market power that could allow it to increase prices and decrease quality of coated mechanical paper and coated wood-free paper. Both are types of paper used to print magazines, books and promotional materials.
Commission's Statement on Benefits and Risks
"The Commission is currently unconvinced that integrating the relevant activities in the joint venture would bring enough benefits, in terms of cost savings or environmental or resilience improvements, to offset the potential harm," it said in a statement.
Responses from UPM-Kymmene and Sappi
UPM-Kymmene's Position
UPM-Kymmene said in a separate statement it was reviewing the Commission's statement with Sappi and that it was confident it would be able to respond fully to its concerns.
Justification for the Joint Venture
UPM-Kymmene said it "remains convinced that the planned joint venture is a necessary step to secure reliable supply continuity for graphic paper customers in Europe and strengthen the resilience of the entire European graphic paper industry."
Currency Conversion
($1 = 0.8568 euros)
Reporting Credits
(Reporting by Bart Meijer, additional reporting by Louise Rasmussen in Copenhagen;Editing by Sudip Kar-Gupta and Anna Ringstrom )
