The Norwegian Competition Authority cast doubt on the proposed deal for TeliaSonera to acquire the Norwegian unit of Tele2.
The watchdog stated a number of objections to the deal, including the fact that the transaction would reduce the number of mobile operators in Norway from three to two.
The NCA said that the deal “will harm the competition climate”, resulting in higher prices and lower quality for consumers.
This prompted the NCA to warn that it is considering blocking the deal, although it said that issuing the statement “does not prejudge the final outcome of the investigation”.
TeliaSonera had looked to address potential hurdles, but NCA director Gjermund Nese said that its efforts “do not sufficiently address the NCA’s competition concerns”.
At the beginning of October, Mobile Norway, owned by Tele2, signed an agreement with newcomer Ice in the hope it might allay competition worries.
As part of the agreement, Ice would acquire part of Tele2’s mobile infrastructure in the event of TeliaSonera winning regulatory approval for its Tele2 bid.
In addition, Tele2 would lease spectrum from Ice until 1 April 2015. TeliaSonera said this will guarantee network access by Mobile Norway’s existing customers in the transition period until the regulator decides on the acquisition.
TeliaSonera announced its SEK5.1 billion bid for Tele2′s Norwegian operations in July. Tele2 was looking for a Norway exit after losing out to Ice in an auction of 4G spectrum.
The companies have until 22 December to provide their views on the objections, with the final deadline for the NCA decision on 15 January next year.