UPM and Sappi: Graphic Paper Joint Venture Faces EU Competition Scrutiny
Plans to combine selected graphic paper operations of UPM and Sappi continue to face regulatory challenges in Europe. The European Commission has reiterated its concerns about the proposed joint venture, while the two groups are preparing remedies to address the objections. The Commission’s provisional deadline for a decision is 9 December 2026.
A €1.42 billion joint venture
Announced in 2025 and formalised through binding agreements in May 2026, the transaction would create an independent company owned equally by the two groups. Valued at approximately €1.42 billion, the joint venture would combine UPM’s communication paper business in Europe and the United States with Sappi’s European graphic paper operations, specialty paper business and related activities.
The companies say the aim is to create a more efficient and financially robust business capable of addressing a market facing declining demand, excess production capacity and high energy costs. Both groups see consolidation as a way to strengthen the long-term competitiveness of their graphic paper operations.
The European Commission’s competition concerns
On 26 August 2026, the Commission announced that it had sent the companies a Statement of Objections, a formal document setting out its preliminary concerns about the transaction. The regulator believes the joint venture could gain significant market power in certain coated paper categories, particularly coated mechanical paper and coated wood-free paper.
The Commission is concerned that the combination could weaken competition, potentially leading to higher prices, lower quality or less choice for customers. It has also questioned whether the benefits claimed by the companies, including production efficiencies and greater security of supply, would be sufficient to offset the potential negative effects.
The Statement of Objections does not constitute a final decision. The investigation remains open, and UPM and Sappi have the opportunity to respond to the Commission’s concerns.
Remedies under discussion
On 5 October, UPM confirmed that it had received a new communication from the European Commission, known as a Letter of Facts, setting out further elements supporting the regulator’s competition concerns. The two groups intend to submit proposed remedies but have ruled out asset divestments, at least for the time being.
At the companies’ request, the Commission granted an additional 20 working days within the procedure to allow them to formulate their proposals. It remains to be seen whether these remedies will be sufficient to address the competition concerns.
Implications for the European paper industry
The case highlights the challenge of balancing the need to adjust production capacity to a shrinking market with the protection of competition. UPM and Sappi argue that the combination is necessary to maintain a competitive and reliable European graphic paper industry. The Commission must assess whether the expected benefits are compatible with effective competition.
The outcome will matter not only to the two groups, but also to industrial customers purchasing graphic paper and to the future structure of the European market. Until the Commission reaches its decision, the proposed joint venture remains subject to regulatory approval.
Key Sources
- Reuters — UPM, Sappi get more time to ease EU antitrust concerns with remedies, 6 October 2026
- UPM — Update on the European Commission’s concerns, 5 October 2026
- European Commission — Preliminary objections to the joint venture, 26 August 2026
- Sappi — Official information on the proposed graphic paper joint venture
