Two global packaging companies approved to merge

January 25, 2025 — The European Commission has officially approved US based International Paper Company's acquisition of UK based DS Smith Plc, under strict conditions aimed at preserving market competition within the global paper and packaging sectors, a press release by the European Commission stated. This announcement comes after a thorough investigation highlighted potential anti-competitive practices arising from the merger.

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.

The Commission's investigation indicated that the initial merger proposal posed significant risks to market competition, particularly concerning the production and supply of corrugated sheets and cases in several regions, including northern and western Portugal, northeast Spain, and northwestern France. Findings indicated that the merger could lead to substantial market concentration, with insufficient alternative competitors to keep prices in check. Ultimately, such a scenario would likely increase costs for businesses and consumers alike.

To alleviate these concerns, International Paper offered to divest five of its plants across Europe. This includes three facilities in Normandy, France—two box plants located in Saint-Amand-Villages and Mortagne, and a sheet plant in Cabourg—alongside a box plant in Ovar, Portugal, and another in Bilbao, Spain. These strategic divestitures are designed to resolve overlapping activities and promote a competitive environment in the affected markets.

Teresa Ribera, the Executive Vice-President for Clean, Just and Competitive Transition, emphasized the importance of the commitments made during this approval process. "International Paper and DS Smith are two leading paper and packaging companies. As initially notified, this deal would have further increased the concentration levels in local markets for the supply of corrugated sheets and cases in Portugal, Spain, and France. It would have likely resulted in higher costs for businesses relying on boxes for the delivery of their products, and ultimately for consumers buying them," Ribera stated. "The divestments offered by the parties address all our concerns, ensuring that these markets remain competitive."

The Commission's decision is contingent upon full compliance with the commitments outlined by the companies. An independent trustee will be appointed to oversee the implementation and ensure that competition remains robust within the market.

The acquisition, initially notified to the Commission on November 25, 2024, showcases the regulatory body's ongoing commitment to maintaining competitive markets, particularly for transactions that meet specific turnover thresholds. The approval process typically spans 25 working days for initial assessments, with additional time allocated for further analysis if required. In this instance, the inclusion of commitments extended the review period to 35 working days.

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