The European Commission has unconditionally approved, under the EU Merger Regulation, the proposed acquisition by Suzano S.A. (‘Suzano’) of Kimberly Clark IFP NewCo B.V. (‘Kimberly-Clark IFP’). The Commission concluded that the transaction would raise no competition concerns in the European Economic Area (‘EEA’).
Suzano is a leading global producer and supplier of wood pulp, specifically of bleached eucalyptus kraft pulp (‘BEKP’). Kimberly-Clark IFP consists of Kimberly-Clark Corporation’s International Family Care & Professional (‘IFP’) business located in Europe and several other regions in the world. The IFP business covers the production and sale of tissue products for personal and professional use, such as tissues and toilet paper.
The Commission’s investigation BEKP, which Suzano supplies globally, is a main component for the production of tissue paper products, by companies like Kimberly-Clark IFP. The Commission therefore investigated the vertical link between the companies’ activities and the impact of the proposed transaction on the markets for the supply of BEKP, and the production of tissue paper products.
In its investigation, the Commission gathered extensive evidence from the companies and third-party market participants at both levels of the supply chain. On that basis, it found that the transaction would not significantly reduce competition in the internal market.
In particular, competing tissue producers in the EEA will continue to have access to sufficient BEKP supplies, despite Suzano’s position as the leading supplier globally and in the EEA. Suzano holds a moderate market share in the EEA and competes with a substantial number of credible alternative suppliers. The market investigation showed that the EEA BEKP market is large, diverse and well-supplied, comprising both global suppliers, who serve the EEA through direct shipments, and EEA-based producers. Given the current spare capacity in the EEA BEKP market, the Commission found that EEA-based tissue producers would retain sufficient alternative supply options even if Suzano were to restrict supplies or worsen terms for competing tissue producers.
Moreover, the market investigation confirmed that EEA tissue producers, who routinely source BEKP from multiple suppliers, face no significant barriers for switching BEKP suppliers, which reduces the risk that tissue producers competing with Kimberly-Clark IFP could be disadvantaged, for example through higher BEKP prices.
Finally, the Commission found that even if the merged entity disadvantaged its tissue competitors, Kimberly-Clark IFP’s limited market position in the EEA would prevent it from profitably increasing its sales and hence not justify such a strategy. The Commission therefore found that the merged entity would not be in a position or have a commercial incentive to restrict other EEA tissue producers’ access to BEKP.
The Commission therefore concluded that the proposed transaction would not raise competition concerns on any of the markets examined in the EEA, and cleared the transaction unconditionally.