EU: DG Comp approves acquisition of Fibria by Suzano

Suzano and Fibria, both from Brazil, are the two largest global suppliers of bleached eucalyptus kraft pulp (BEKP), an input to the paper, tissue, and packaging industry.

The Commission investigated concerns that the proposed acquisition would significantly reduce the level of competition in the market for the manufacture and supply of wood pulp, in particular BEKP. In particular, the merged entity would combine the two largest producers worldwide, three to four times larger than the next competitor.

Furthermore, Fibria had an offtake agreement since 2016 with Klabin, another major Brazilian producer of BEKP. On the basis of this agreement, Fibria acted as an exclusive sales agent for all sales of BEKP produced by Klabin outside of South America. This further increased the combined volumes controlled by the merging companies, and effectively prevented the entry of Klabin as a competitor outside South America.

To address the Commission’s competition concerns, Suzano offered the following commitments:

• the termination of the offtake agreement in place between Fibria and Klabin; and

• the transfer of all assets and personnel necessary to allow Klabin to independently sell BEKP in the European Economic Area (EEA), including: (1) storage capacity in the destination ports in the EEA, (2) shipping contracts and access to ports during a transitional period; (3) customers, credit history and other records; and (4) technical support and assistance during a transitional period.

These commitments eliminated the Commission’s concerns in relation to the proposed acquisition. The Commission concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns in the EEA.