Mergers: Commission opens in-depth investigation into creation of “NewCo”, combining Munksjö and part of Ahlstrom.

Brussels, 10-12-2012 — / — The European Commission has opened an in-depth investigation under the EU Merger Regulation into the planned combination into a new merged entity of Munksjö AB, a Swedish-based manufacturer of high value-added paper products, and the European label and processing business of Ahlstrom Corporation (ALP), a Finnish manufacturer of high performance materials. The two entities would be transferred to a new company, “NewCo”, through a series of transactions. The Commission’s preliminary investigation indicated potential competition concerns in the markets of pre-impregnated paper (“PRIP”) and abrasive paper backings, where NewCo would have high market shares both in the European Economic Area (EEA) and worldwide. The decision to open an in-depth inquiry does not prejudge the result of the investigation. The Commission now has 90 working days, until 29 April 2013, to take a final decision on whether the transaction would reduce effective competition in the EEA.

Commission Vice President in charge of competition policy Joaquín Almunia said: “This proposed merger in the paper industry would remove a competitor from some markets which are already highly concentrated. The Commission needs to make sure that effective competition is preserved and prevent harm to customers, particularly when the only few available sources of supply are at stake.”

Munksjö and ALP produce, among others, PRIP, a kind of decor paper ultimately used in the furniture industry; abrasive paper backings, used as inputs for producing abrasive products such as sandpaper, sanding discs and belts; and electrotechnical paper, used for insulation of high voltage submarine cables, transformers, motors and generators.

The Commission’s initial investigation has shown that the proposed transaction would combine two leading suppliers of PRIP and abrasive paper backings, both in the EEA and worldwide. At this stage of the investigation, the Commission has concerns that the remaining competitors in both markets may not be able to exert sufficiently strong constraints on the behaviour of the merged entity. The removal of an important competitor may lead to a reduction of choice for customers and potentially an increase in prices for the products concerned.

The Commission will now investigate the proposed merger in-depth to determine whether these initial concerns are confirmed or not.

The transaction was notified to the Commission on 31 October 2012.

Companies and products

Munksjö is a Swedish-based manufacturer of high value-added paper products in several product areas (decor paper, PRIP, abrasive backings, electrotechnical paper, fine art paper, pulp, Spantex and thin paper). Munksjö is controlled by the Guernsey based investment fund EQT III Limited.

Ahlstrom is a Finnish manufacturer of high performance materials, divided in four business areas: building and energy, filtration, food and medical, label and processing. The proposed transaction only concerns Ahlstrom’s European label and processing business.

Both Munksjö and ALP produce paper products in various segments. However, their activities overlap in PRIP, abrasive paper backings and to a minor extent in electrotechnical paper.

NewCo will not be controlled, either solely or jointly, by any of its shareholders.

Merger control rules and procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The Commission clears the vast majority of mergers after a one-month review, but if it has competition concerns it must open an in-depth investigation (Phase II review). The opening of a full probe does not prejudge its outcome.

There are currently three other on-going phase II investigations. The first one examines the proposed acquisition of Orange Austria by Hutchison in the field of mobile telephony (see IP/12/726). The Commission has until 21 December 2012 to reach a final decision. The second phase II investigation concerns the planned acquisition of TNT Express by UPS in the small package delivery sector (see IP/12/816), with a deadline set for 5 February 2013. Finally, in the third on-going phase II, the Commission investigates Ryanair’s project to merge with rival Aer Lingus (see IP/12/921).The deadline here is 6 February 2013.

More information will be available on the competition website, in the Commission’s public case register under the case number M.6576.

Contacts :Antoine Colombani (+32 2 297 45 13)

Marisa Gonzalez Iglesias (+32 2 295 19 25)


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