Aug 26 (Reuters) – The EU Commission on Wednesday said it is concerned that the proposed €1.42 billion ($1.66 billion) ‌paper joint venture between Finland’s UPM-Kymmene and South African-listed Sappi could restrict competition.

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.

“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.

The EU has sent a statement of objections to the companies, which now have a right to reply and to request an oral hearing.

($1 = 0.8568 euros)

(Reporting by Bart Meijer;Editing by Sudip Kar-Gupta)


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