I can hardly understand the EU commission would accept a merger of the two, as it would practically remove the domestic competition in Norway. Until other players come along that is. Although not a EU member, because of the ‘transnational’ SAS, Norway is 'in effect' part of the EU when it comes to aviation matters.
Also, why don’t simply the much larger SAS with a bigger coffer, get rid of Braathens through lowering the fares in the segments the two compete ?
My feeling is, I may well be wrong though, that SAS want to have Braathens as their stable, well known competitor. A new player might well have been a lot more aggressive and harder to keep at bay.