The Norwegian Competition Authority (Konkurransetilsynet) has released its preliminary assessment of the merger between Norwegian and Widerøe, raising potential red flags for reduced competition within the country’s aviation market.
As such, the authority will continue its investigation of the acquisition beyond its preliminary review, which it had to complete by September 15, 2023.
“The Authority’s preliminary assessment is that competition in the market for air travel may be impaired,” it said, adding that if that is the case, it can rule against the merger.
Konkurransetilsynet’s statement also highlighted that the aviation market in Norway is “large and important” for local passengers, which is why “well-functioning competition is crucial for Norwegian air passengers to have the best possible offer at the lowest possible price”.
Following the preliminary assessment, the authority now has until November 17, 2023, to present a new assessment of the merger. Subsequently, a supervisory authority will decide whether to approve or warn the companies that it would be “appropriate to stop” the transaction from taking place.
“Our preliminary assessment is that there may be reason to fear that the acquisition is negative for Norwegian air passengers,” Katrine Amdam, a project manager at Konkurransetilsynet, said.
In a filing on the Oslo Stock Exchange (Oslo Børs), Norwegian said that both carriers involved in the merger will continue cooperating with the authority to ensure that it would be “approved as soon as possible”.
“Having operated side by side for many years, we believe that by acquiring Widerøe, we will be able to
create a streamlined and more comprehensive offer for air travel across Norway and abroad,” Geir Karlsen, the chief executive officer (CEO) of Norwegian, said in the filing.
According to Karlsen, the company “strongly believes” in a positive result following the Konkurransetilsynet’s assessment.
On September 15, 2023, Norwegian’s shares opened at NOK8.8 ($0.81) per share, lower than NOK8.95 ($0.82) on September 18, 2023.
Widerøe is not a publicly listed company and has not publicly responded to the authority’s preliminary review of the merger.
Both airlines announced the transaction in July 2023, with Karslen saying at the time that the two airlines would create “a streamlined and more comprehensive offer for all customers, and we look forward to offering seamless travel across our entire route networks”.
Norwegian expected the merger to close in the latter half of Q4 2023.
