UPM-Kymmene/Haindl merger cleared

The European Commission has decided to clear the proposed acquisition by UPM-Kymmene of Haindl'sche Papierfabriken KGaA. This follows an in-depth investigation of whether the merger would create collectively dominant positions for the largest suppliers in the newsprint and magazine paper markets. In particular, the Commission was concerned that the largest suppliers would be able to coordinate capacity decisions in order to drive up market prices, either by restricting the amount of new capacity that came onto the market, or by agreeing to reduce capacity utilisation rates. In adopting this decision, the Commission concluded that coordination on new capacity investments was unlikely due to the irreversibility of new investment decisions restricting available punishment strategies. Moreover, any attempt by large firms to limit capacity utilisation would result in fringe suppliers expanding their output. Frontier (London) was retained in this case by UPM-Kymmene. For more details, click here.