Norway's competition authority, Konkurransetilsynet, has indicated that it will block the proposed SAS takeover of Braathens. The case is far from over though.

Observers point out that the decision is not a surprise given the political climate generated by the SAS/Maersk Air price-fixing affair. The two carriers were fined by Brussels after being found guilty of anti-competitive behaviour.

Against this background, the Konkurransetilsynet says that it has not been made clear that Braathens is a failing company -Êa key argument for the takeover. Braathens chief executive Arne Jensen said at the time of the proposal that the Norwegian carrier would not survive without co-operation with SAS.

One Copenhagen-based analyst pointed out that Braathens had gone to other carriers, including British Airways, Finnair and 30% shareholder KLM, in a fruitless search for a partner, before contacting SAS as a last resort. "Iam quite convinced that no one else is going to come in to take Braathens over," he warns.

The Norwegian Government faces a huge political risk if it blocks the deal and Braathens ends up bankrupt, the analyst points out, given the fact that it is an integral part of the Norwegian transport system and the possibility of job losses. Observers point out that it may even be in the best interests of Braathens to file for bankruptcy to put pressure on Oslo.

The Konkurransetilsynet is due to make its decision at the end of November, while SAS will put its counter arguments forward in early September. In a statement, SAS says that if there is still disagreement after negotiation, it will appeal against the decision.

Source: Airline Business