Still, a merger is unlikely to have any immediate effect on paper prices or supply.

The current level, 95 percent, is reflected in rising paper prices.

Catalogue retailers may see the most benefit from falling paper prices.

Also, many catalogue companies were able to send out more books this year, as paper prices fell.

"And we think Unisource has the potential for decent earnings even if paper prices stay the same."

Color film and paper prices have fallen about 10 percent from a year ago, he said.

Many are just completing a building phase, started in the mid-80's when paper prices were rising steadily.

Although paper prices are cyclical, improvements in technology have made manufacturing cheaper.

Most companies expanded wildly when paper prices started to soar in the mid-90's.

Sales fell 12 percent, to 1.35 billion, reflecting lower paper prices and volumes.