The Norwegian Competition Authority has rejected the proposed acquisition of Norwegian shipping firm Nor Lines by Icelandic transportation company Eimskip.
The acquisition would have “significantly impeded” effective competition in the market for transportation of frozen fish with reefer vessels from Northern Norway to Northern Europe, according to the authority.
“The Competition Authority is obligated to block acquisitions that harm competition. Eimskip and Nor Lines are close competitors and collectively hold a substantial market share in today’s market,” Lars Sørgard, Director General of the Competition Authority, said.
“Our assessment is that an acquisition would result in reduced competition, which would make it possible for Eimskip to increase prices or reduce quality for its customers,” Øyvind Nilssen, Acting Director of the Competition Authority, explained.
The authority’s decisions are subject to appeal to the newly established Competition Appeals Board.
Commenting on the authority’s decision, Gylfi Sigfússon, President and CEO of Eimskip, said: “I am very disappointed with this decision as the Norwegian Competition Authority defined the market in a very narrow way and consider Eimskip market leading in transportation of frozen fish in North Norway.”
Announced in November 2016, the acquisition of Nor Lines was part of Eimskip’s efforts to expand its presence in the country.
The company earlier informed that it would restructure Nor Lines’ business in order to improve its services and profitability by aligning it with Eimskip’s current operations in Norway.
After the authority rejected Eimskip’s proposal, the company said it “will seek other options in developing and strengthening its operations in Norway.”
According to Eimskip, the potential acquisition of Nor Lines has no effect on the company’s EBITDA forecast for the year 2017. Acquisition cost related to this project was expected to amount to EUR 300,000 (USD 319,719) which will be expensed in the first quarter of 2017.