Tag Archives: Ahlstrom

Mergers: Commission sends warning to Munksjö and Ahlstrom for providing misleading information in a merger case

Press release here.

Mergers: Commission sends warning to Munksjö and Ahlstrom for providing misleading information in a merger case

The European Commission has sent a Statement of Objections (SO) to Ahlstrom Corporation, Munksjö Oyj, both of Finland, and Munksjö AB of Sweden. In October 2012 Ahlstrom and Munksjö, both producers of speciality papers, had notified the Commission of plans to combine their activities in the production of abrasive paper backings. The Commission takes the preliminary view, that the parties provided misleading information with regard to the market for abrasive paper backings. Such behaviour, if established, would be in breach of the companies’ obligation to include their true best estimates of the markets in question in the notification and could result in a fine of up to 1% of turnover. The sending of a Statement of Objections does not prejudge the final outcome of the investigation.

In October 2012, Ahlstrom and Munksjö notified a transaction whereby the label and processing business of Ahlstrom Corporation and Munksjö AB were to be transferred to a new company (“NewCo”), which was later renamed Munksjö Oyj (case M.6576). At the time of the notification, Ahlstrom and Munksjö AB were both producers of heavy weight abrasive paper backings, which are carriers for abrasive products such as sandpaper, sanding discs and sanding belts.

In January 2013, the companies supplied internal documents, which indicate that they estimate the size of the markets for abrasive paper backings and the heavy-weight sub-segment, both with regard to sales in the European Economic Area (EEA) and on a worldwide level, to be significantly lower and, consequently, their own market share significantly higher than what they had stated in the notification.

The notifying companies’ obligation to provide information which is to the best of their knowledge correct and complete is one of the cornerstones of merger control. The provision of misleading information could conceal a competition problem and lead to the clearance of transactions, which are harmful for effective competition.

If the Commission finds that the parties provided at least negligently misleading information, it can impose a fine of up to 1% of the annual worldwide turnover of the companies concerned.

The process of approving mergers in the EU is a complicated one, which involves secret internal information and semi-public other information. The issue of market share is indeed one of the core aspects of approving mergers, and it seems that the DG Competition is well aware of the risks of too-strong conglomerates, especially in fields with specialized products.

I do not as such have an opinion about this merger but this case seems to support the case that you need rules to have a functioning ‘free’ market. And although I have my doubts about the UPM-Kymmene/Myllykoski merger in 2011 (because it was all to clear that UPM would shut down Myllykoski if the merger was accepted), I think in general the EU competition policy apparatus works quite well when it comes to mergers.

Paper industry news

Among all the developments in the Eurocrisis it is too easy to forget that there is lot happening in the paper industry as well. Some issues relate to the future of the industry, some to the current business model.

One such new development is the production of flexible graphite circuits, made from/on paper. This Finnish link states that it is unclear how and why graphite forms from cellulose, but in any case it could be a great development for intelligent paper and such applications.

Another interesting development, on a different scale, is a concept car made of biomaterials in a co-operation between UPM Kymmene and the Metropolia University of Applied Sciences. This link has some interviews with participants in the project. It would be great, a car that is biodegradable to a large extent!

In the category ‘Finnish forest industries are transforming into energy producers’ we have the news that UPM Kymmene wants to build up to 22 windmills in Paltamo. Currently, assessment of environmental impact is being carried out. The wind-power park would provide, depending on the final configuration, some 44-85 Megawatts.

In the same theme, two items that I missed: UPM did get EU support for a biofuel refinery (in France) while Stora Enso and Neste missed out on this.

Regarding prices, the IPW published news that two big players are increasing prices of specialty papers due to higher demand (Sappi and Ahstrom). If I have time, I should get back to the issue of pricing in pulp, paper, board and specialty paper.

And finally, the UPM Stracel sale has been finalized. I reported about this earlier, but these processes take their time. It is good to see that skilled personnal can still find good jobs – if there is a willingness to take a risk to invest.

Paper industry financials, biofuel and expansion in China

After a scientific break at the Finnish Working Life Research Days, I can catch up with some news in the paper industry. At the conference, I also had the chance to chat a lot with the researcher of the Finnish Paper Workers’ Union, which was quite interesting and useful.
First, some companies ‘nearby’, i.e. in Sweden and Norway, seem to have a bit of financial trouble. In the case of VIDA Paper AB, I don’t know what is behind the termination of credit and loans, but the press release says that the company will continue its business as usual as long as the ‘reconstruction’ is in progress. The downgrade for Norske Skog is a bit more serious:

‘Moody’s believes that the company’s debt burden will remain substantial compared to its inability to generate meaningful profits.’

It also lists some positive achievements but the press release looks like Norske Skog has to achieve quite a bit of positive news for it to receive a credit upgrade (‘a trend of improving operating profitability and cash generation ability […] evidence of a sustainable liquidity position.’) Probably this is a case to follow up upon, because this company is a relevant competitor although it is the smallest of the main forest industry companies in Europe.

This news by Metsä Board made me quite happy:

The biopower plant owned by Pohjolan Voima and Leppäkosken Sähkö was inaugurated at the Kyro mill.

Otherwise, the press release acknowledges the difficult market situation, successful investments to expand board production etc. The company is apparently in a quite good position at the moment, as far as I understand from this news – even though there are a lot of uncertaincies.
Then, when I started reading the headline of this news, I was positively surprised, until I got to the end of the headline. UPM Raflatac expands technology and R&D…in China. While this is probably good for the whole Raflatac and UPM, it is again a reminder of where the growth markets of the paper industry lies.  UPM Raflatac seems to be doing well, regarding recent acquisitions and expansions.


Also Ahlstrom has a new plant in China (in specialized paper), which probably means a great deal. Per the press release:

The plant is a joint venture together with Longkou Yulong Paper Co. Ltd, and it produces medical papers used for sterilization wraps and masking tape base papers for the building industry in the Asian market.


I don’t know much about that specific market but it seems a rather sensible investment.