The world’s largest producer of magazine-quality paper won approval recently from a European regulating agency to buy the company that owns Madison Paper Industries, clearing the way for a final deal.

The European Commission has been conducting an in-depth investigation since March 4 into whether the sale of the Madison mill’s parent, Myllykoski Corp., would give the acquiring company, UPM-Kymmene Corp., too much influence over the European paper market.

The commission — a competition watchdog for the 27 countries within the European Union — announced July 13 in Brussels that the merger of the two Finnish paper producers still would provide customers enough alternative suppliers and allow adequate competition from other businesses.

“I’m satisfied that there will remain sufficient competition after the acquisition,” said Joaquín Almunia, commission vice president in charge of competition policy, in a statement.

The pending $1.29 billion sale of debt-laden Myllykoski and its companion company Rhein Papier GmbH was announced Dec. 21. Myllykoski has owned the Madison paper mill for 32 years. It also owns six other publication paper mills in Germany and Finland.

Having obtained all required regulatory clearances, Myllykoski and purchaser UPM plan to complete the transaction within the next month, spokesmen for each company said.

Madison Paper employees and Somerset County residents are waiting anxiously to see what happens once the sale is complete.

Madison Paper is a top employer in Madison, with about 215 workers, company president Russ Drechsel said Monday. It is the town’s largest taxpayer, providing 46 percent — $3.7 million out of $8.07 million — of the town’s real estate and personal property taxes in 2010, according to town records.

Madison Paper will continue to operate normally until a deal is struck, Drechsel said. He was unaware of any plans UPM might have for Madison Paper.

“They can’t even say what those plans would be,” he said. “We will be continuing business as normal until the acquisition is closed.”

The European Commission originally was concerned about whether the transaction would give UPM an unfair market advantage in magazine paper, particularly supercalendered paper, according to a statement from the commission. The supercalendered, or noncoated, paper has a smooth surface and often is used for catalogues and advertising materials.

However, the commission discovered that competitors have a significant spare capacity that would allow them to react accordingly if UPM tried to raise prices.

Jussi Pesonen, UPM’s president and chief executive officer, said he was happy with the commission’s decision. In the past, the company has said it believes consolidation of European paper businesses will help boost profitability in the paper sector, which has suffered from a slowing demand with the rise of digital devices.

“The approval of the transaction means that the European paper industry has better prerequisites to be competitive in the rapidly evolving world of media and against global industry players,” Pesonen said.

The commission generally has 25 working days to decide whether to grant approval of a merger or start an investigation. There are currently just three active investigations.

The pending transaction also includes Myllykoski’s 0.8 percent ownership of the Finnish energy company Pohjolan Voima Oy.

Erin Rhoda — 612-2368

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