EU Commission approves International Paper’s acquisition of DS Smith subject to conditions

The European Commission has approved, under the EU Merger Regulation, the proposed acquisition of DS Smith Plc (‘DS Smith’) by International Paper Company (‘International Paper’). The approval is conditional upon full compliance with the commitments offered by the parties.

The Commission’s investigation

International Paper and DS Smith are two vertically integrated paper and packaging companies. The Commission’s investigation showed that the transaction, as initially notified, would have reduced competition in the markets for the manufacture and supply of

• (i) corrugated sheets in the North and West of Portugal;
• (ii) heavy-duty corrugated sheets in North-East Spain; and
• (iii) corrugated cases in North-West France.

Notably, the Commission found that the transaction would have resulted in high combined shares, as well as high concentration levels, in several local markets. The Commission also found that, after the merger, there would not be enough alternative competitors to exert sufficient competitive pressure on the merged entity. This would have led to higher prices for consumers in the affected markets.

The proposed remedies

To address the Commission’s competition concerns, the parties offered to divest five of International Paper’s plants in Europe:

• (i) three plants in Normandy, France (namely, one box plant in Saint-Amand-Villages, one box plant in Mortagne, and one sheet plant in Cabourg);
• (ii) one box plant in Ovar, Portugal; and
• (iii) one box plant in Bilbao, Spain.

These commitments fully address the competition concerns identified by the Commission, by fully removing the overlaps between the parties’ activities in the corrugated cases markets in North-West France. The commitments also eliminate the overlap as regards the supply of corrugated sheets in the problematic local markets in Portugal and Spain and, as such, any vertical foreclosure concerns regarding corrugated cases.

The Commission will subsequently approve the suitable purchaser or purchasers of the divested businesses.

Following the positive feedback received during the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.

The decision is conditional upon full compliance with the commitments. Under the supervision of the Commission, an independent trustee will monitor their implementation.

Companies and products

International Paper, headquartered in the US, is a provider of renewable fibre-based packaging and pulp products, as well as a recycler of fibre-based waste. It serves customers from manufacturing operations in North America, South America, North Africa, and Europe.

DS Smith, headquartered in the UK, is an international provider of sustainable fibre-based packaging, focused mainly in the European and North American markets. It also has recycling and paper-making operations.

More Information

The transaction was notified to the Commission on 25 November 2024.

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

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). If commitments are proposed in Phase I, the Commission has 10 additional working days, bringing the total duration of a Phase I case to 35 working days, such as in this case.

More information will be available on the Commission’s competition website, in the public case register under the case number M.11564.

*Updated on 24 January 2025 at 16:30 CET.