The case in summary • Norwegian Group has put NOK 1.1 billion on the table to buy Widerøe• The Norwegian Competition Authority must approve the acquisition before it can become a reality• Widerøe must keep the brand and the head office will be located in Bodø• The acquisition can help increase the profitability of the companies • Managing director of Widerøe believes this will be good for the company• Associate professor Espen Andersen believes Norwegian will challenge SAS on the Norwegian market• Federation leader Aleksander Wasland of the Norwegian Aviation Association hopes the culture in Widerøe will be continued The summary is made by an AI service from OpenAi. The content is quality assured by news’s journalists before publication. On Thursday morning, the announcement came that Norwegian is buying Widerøe for NOK 1.125 billion. – It is a big day in the history of aviation, and a big day for consumers, said chairman of Norwegian, Svein Harald Øygard, at the press conference on Thursday morning. The companies operate within two quite different markets. Norwegian’s operations are largely concentrated around flying passengers to the south of Europe and on the major domestic routes, while Widerøe operates mostly in Norway – primarily in the Norwegian short-haul network. As the situation stands today, there is little competition between the two companies – other than on a few routes. In other words, there is a limited overlap. High threshold for stopping In order for the acquisition to go through, the Norwegian Competition Authority must approve the acquisition. The threshold is high for them to be able to intervene and stop it. Then they must conclude that “competition is significantly weakened”. The way the market looks today, it will be difficult. Norwegian CEO Geir Karlsen is absolutely right that the two companies are more complementary than they are competitors. But the Norwegian Competition Authority is not only working on the situation as it looks today, but also on how it would have looked if the acquisition had not come to fruition. There are several key questions they are likely to look at, including: How does this look going forward – with and without acquisitions? Widerøe is on some joint routes with Norwegian now. If they had not been acquired, would they have expanded and competed on more routes? If Widerøe had not been acquired – would it have been likely that a foreign player could come in and buy them, and use it as a bridgehead into the Norwegian market? That would be good for competition in the Norwegian market, and would help to push ticket prices down. Demanding documentation It is still not straight forward for the Competition Authority to document this. Working counterfactually with a “what if not” argumentation is demanding to document. This work will be done by reviewing various documentation, including board papers at Widerøe. Have they made any strategic considerations about expanding their routes? Have they been in dialogue with other stakeholders? If the inspectorate can point to such concrete assessments, they can argue for intervening against the acquisition. It is still far from certain that any conversations with others are documented through board papers, if they have taken place orally and more by hand. For Widerøe, it can be a narrow matter to say “but there was no one else”, if there is no trace of it. Cementing the duopoly Although it will take a lot for the Norwegian Competition Authority to intervene, there is much to suggest that the acquisition will go a long way to cementing a duopoly in the Norwegian market. It will be almost impossible for a third competitor to establish itself here for a long time to come. For SAS, which is struggling in the middle of an extensive restructuring process, this is bad news. Through the acquisition, they gain a tough competitor, and SAS will find it even more difficult in Norway. It will probably also be even more difficult to get the restructuring in place. Norwegian itself says that ticket prices will not rise, and it also remains to be seen how this will affect the prices. But when you go from three to two players in a fairly small market, it’s pretty obvious that it won’t be particularly positive for competition – and thus neither will prices. Whether it is enough for the Competition Authority to intervene is a completely different matter.
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This can stop the acquisition – Statement
