Norway’s Competition Authority has warned that it may block Norwegian’s acquisition of Widerøe over concern that it could affect competition in the country’s aviation market. 

The authority said that its assessment of the proposed acquisition had led it to believe that it could lead to more expensive and fewer overall flights for passengers in the country and higher prices for other airlines using ground handling services at some airports. 

Norwegian Competition Authority Director General Tina Søreide said: “The market for air travel is a large and significant market for Norwegian consumers. The acquisition will result in a reduction from three to two players on several domestic routes. 

“There is a risk that competition in the market may be impaired in a way that leads to increased prices and a reduced choice for Norwegian air passengers.” 

Both Norwegian and Widerøe have been informed of the authority’s concerns and will have until 8 December to submit their comments before a final decision is due by 3 January 2024, though the authority said an already submitted proposal by Norwegian on-ground handling concerns was not considered adequate at this stage. 

When announcing the acquisition, Norwegian previously highlighted that only five of its routes overlap with Widerøe's offerings, with both airlines covering 107 routes in Norway.

A joint response from the airlines said they were both disappointed by the authority's warning but were positive about a final outcome, with Norwegian CEO Geir Karlsen saying: "Based on the facts of the case, I am optimistic about the final outcome of the application process."

The acquisition was first announced in July, with the competition authority saying it was given official notice in August and told the airlines in September that it needed more time to assess the impact of the Nkr1.13bn ($105m) deal. 

However, the competition authority said that it had now decided that regional routes and airports could be affected by the merger of two competitors in the country. 

Katrine Amdam, project manager for the authority, said: “With only two market players, it may become easier for the parties to coordinate prices on domestic flights. Moreover, competition may be impeded on routes where the two parties are competitors prior to the transaction. 

“Lastly, there is a risk that airlines competing with the parties will be faced with higher prices for ground handling services on the airports in Evenes, Alta and Kirkenes.”

If the authority goes ahead with a possible blocking of the deal, it would become the latest airline acquisition to face troubles with competition authorities in the last year, following the high-profile lawsuit between JetBlue and the US Department of Justice over concerns about its merger with Spirit Airlines.