Norway’s competition authority (Konkurransetilsynet) has released a provisional assessment that it remains of the opinion that “competition in the aviation market may be significantly weakened” if the planned acquisition by Norwegian (Oslo Gardermoen) of rival carrier Widerøe (WF, Bodø) is allowed to go ahead.
The watchdog had already, in mid-September, said it was concerned that a tie-up could lead to higher prices and fewer departures for passengers. It has now announced that a possible ban may be slapped on the deal. Permitting the merger would leave only two airlines, Norwegian and SAS Scandinavian Airlines (SK, Copenhagen Kastrup), to compete for passengers in Norway, it said.
“The acquisition would lead, among other things, to us going from three to two players on several domestic routes. We see a real risk that competition in the market could be weakened in a way that leads to higher fares and a worse range of routes,” said the regulator’s director, Tina Søreide.
There is a risk, it said, of weakened competition on routes where Norwegian and Widerøe currently compete against each other – for example between Bergen and Stavanger or between Bergen and Trondheim, not to mention several indirect routes between cities in Norway where the carriers offer flights with a change in Oslo or Bergen.
“With only two players in the market, it can be easier to coordinate prices on the domestic network,” it added. There is also “a risk of more expensive ground services for competing companies at Harstad/Narvik, Alta, and Kirkenes airports.”
The competition authority said it had sent a notice to Norwegian saying it “is considering banning the acquisition.” The note “contains a detailed description of the authority’s competition concerns and is based on a preliminary assessment of the evidence in the case.” Norwegian had proposed “remedial measures linked to ground services,” it revealed, but as this “does not cover all the competitive harm that the authority initially considered in the case, this is not considered to be sufficient to approve the acquisition.”
The parties now have until December 8 to respond to this preliminary assessment. The authority’s final deadline for making a decision in the case is January 3, 2024. The deal, announced on July 6, is valued at NOK1.125 billion kroner (USD105 million).
Norwegian said in a statement that it “is surprised by the inspectorate’s reasoning and disagrees with the preliminary conclusion” and stressed that “Widerøe and Norwegian have very few overlapping routes and complement each other with different aircraft fleets and different operations. Both companies will continue to have bases, head offices, and employees in Norway in the same way as today. Widerøe will remain as its own brand and the company will maintain existing agreements with other airlines.”