The company intended to develop its plant as part of the 125m newsprint-recycling project (PrintWeek, 18 January).

Although the Commission recognised the projects environmental benefits, it said it had "serious doubts on whether the aid could be approved under current guidelines on State aid for environmental protection".

WRAP also said that an objection had been submitted to the Commission by "a European competitor to UPM-Kymmene" which it declined to name.

WRAPs director of policy and communications, Ray Georgeson, said the project had attracted such close attention because it is the first to be considered under new environmental guidelines.

The investigation could take at least eight months to complete, but at worst it could stretch to 18 months.

A spokeswoman for UPM-Kymmene said it had confidence in the European Commission investigation.

For its part in the project, UPM-Kymmene will invest 78m in a new recycled fibre pulp facility at Shotton in Deeside, North Wales, which will convert the plant to 100%-recycled fibre.

Donald Charlesworth, company secretary at Aylesford Newsprint, which lost the preferred bidder status to Shotton Paper, said his company had not filed an objection. "Its the first Ive heard of it and I am very surprised to hear the news," he added.

Bridgewater Paper Company and Stora Enso also declared their interest in the project when it was announced last year.

The project will create 321,000 tonnes a year of extra capacity to recycle recovered papers and magazines, an increase of over 30% in the UKs capability.

Story by Andy Scott