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EU Regulators Poised to Block UPM-Sappi Paper Venture

By  |  September 20, 2026
EU Regulators Poised to Block UPM-Sappi Paper Venture

European Union antitrust regulators are preparing to reject a €1.42 billion ($1.66 billion) paper joint venture between Finland’s UPM-Kymmene and South Africa-listed Sappi after the companies failed to resolve competition concerns.

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    The expected veto would derail a combination designed to bring together substantial parts of the companies’ communication-paper operations and create the largest producer in that segment in Europe, according to Reuters. The European Commission, the EU’s competition authority, has until Nov. 11 to make a final decision on the transaction.

    UPM and Sappi declined to comment to Reuters, while the Commission did not immediately respond to the news agency’s request for comment.

    The regulatory dispute centers on communication paper used for products including magazines and books. According to Reuters, the Commission sent the companies a formal statement of objections in August outlining concerns that the venture could weaken competition across several categories of the market.

    EU officials have also warned that the proposed combination could give the venture enough market power to raise prices. In August, the Commission publicly said it was concerned the transaction could result in higher prices and lower quality for coated mechanical and coated wood-free paper, both of which are widely used in printed publications and promotional materials, Reuters reported.

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    UPM and Sappi sought to defend the transaction at a closed-door hearing earlier this week, arguing in part that the combination would provide sustainability and resilience benefits, according to Reuters, which cited a person familiar with the discussions. Those arguments did not persuade regulators, the news agency reported.

    Read more: EU Raises Competition Objections to Sappi-UPM €1.42 Billion Paper Venture

    The companies have not proposed concessions to address the Commission’s concerns, Reuters said. Potential asset sales have been complicated by difficulties identifying an appropriate buyer, according to the report.

    The planned venture would include UPM’s communication-paper operations in Europe and the US and Sappi’s European communication-paper business, along with its specialty-paper operations and related activities, Reuters reported.

    The case has been under heightened regulatory scrutiny for months. The Commission opened an in-depth investigation in April, warning at the time that the transaction could reduce competition and potentially increase prices. The review was subsequently paused in May while regulators waited for additional information from the companies before proceeding.

    The prospective rejection comes as European policymakers debate how competition rules should balance market concentration against arguments that larger companies can strengthen the region’s industrial competitiveness and resilience. For UPM and Sappi, however, Reuters’ reporting indicates that those broader arguments have so far failed to overcome the Commission’s concerns about the immediate competitive effects in the paper market.

    The Commission’s final ruling is due by Nov. 11.

    Source: Reuters