The capture of the Altmark was an attempt to free British prisoners aboard the ship. Altmark had been supply vessel to the German raider Graf Spee, which had sunk nine merchant ships in the South Atlantic. The crews of these ships had been transferred, without loss of life to Graf Spee - while most of the officers would remain aboard her, a total of 299 men were placed aboard Altmark, under guard by armed seamen from Graf Spee. She was intended to return to Germany, and place the men into internment. However, before this could happen, British cruisers caught Graf Spee and drove her into Montevideo harbour. While there, the British officers were released.
This was when the British learned about Altmark. The Foreign Office's agent in Montevideo, a man named Millington-Drake, interviewed the freed prisoners. He learned from them that British subjects were aboard Altmark. The terrible conditions aboard the ship were described, as was the poor treatment of the British subjects. Millington-Drake transmitted this information to London, where it was kept quiet by the Admiralty. Churchill, as First Lord of the Admiralty, wished to win a major propaganda coup by freeing the men, saving them from internment in Germany - as well as freeing them from the abysmal conditions aboard Altmark. Unfortunately Altmark managed to avoid most British patrols until she reached Norwegian waters.
Once Altmark was sighted by British aircraft, the Admiralty directed available ships in the area towards her. The 4th Destroyer Flotilla had been deployed off the Norwegian coast to intercept any German ships travelling to Narvik. Its commander, Captain Philip L. Vian, was told that Altmark was 'the chief objective' of his operation. Once Altmark sought shelter in the Josing Fjord, Churchill again exerted his influence - possibly because he was seeking a way to force Norway to take sides, as a way to reduce the flow of iron ore to Germany through Narvik. He personally instructed Vian that unless the Norwegians agreed to take Altmark to Bergen with an Anglo-Norwegian guard and escort, he was to board her and liberate the prisoners. This was accomplished in the late evening of the 16th February, with eighteen German casualties and one British.
The main German reaction came in the form of propaganda. A radio interview team was despatched to Norway immediately to interview Altmark's captain, Heinrich Dau. On the 18th February, Dau was briefed by the Navy High Command on what to say to the foreign press - the Germans hadn't resisted the boarding, that Altmark was a merchant ship with a civilian crew, and not to mention military cooperation between his ship and Graf Spee. Additionally, Dau was instructed to emphasise that good treatment was given to the British prisoners. On the 19th, Goebbels ordered that 'all propaganda must be focused on this single incident' - and as a result, it monopolised German news output for the next four to five days. This was matched by British propaganda, which emphasised the skill and daring of Vian and his crew, as well as the poor treatment of the Altmark's prisoners. There were no in-line responses by the Germans, though the incident was a factor in encouraging the German invasion of Norway.
The closest to an in-kind response was the Laconia incident of 1942. Laconia was a British troopship carrying British soldiers and Italian prisoners from Cape Town to Freetown. On the 22nd September, she was torpedoed and sunk by a German U-boat, albeit one that was unaware of her cargo. Her survivors, which numbered well over a thousand, were rescued by U-156, which sank her, as well as three other German and Italian subs despatched to aid her. U-156 and another sub, U-506 were attacked by American bombers, causing some casualties on the former, before the survivors were transferred to several Vichy French ships at a mid-ocean rendezvous.
The Altmark incident is rather important in how Norway failed to uphold its obligations as a neutral power during the war and how both Germany and Britain broke Norwegian neutrality.
By international law Norway was supposed to search and imprison the ship, crew and captives. During the Finno-Russian war of 1939 there were multiple Finnish troops that ended up on Norwegian side of the border and they were immediately arrested and held as captives until the end of the war. This is what should have happened with the Altmark.
The Germans did breach Norway's neutrality by travelling in Norwegian territorial waters carrying POWs. If you're a prison transport ship you're immediately classified as a war ship and a war ship cannot enter neutral waters. Norway however failed to uphold its neutral obligations. First by letting a foreign ship sail past in close proximity to a military fortress in Bergen, where it should have been brought in and inspected at first, but they were allowed to sail on. When the Altmark then proceeded in to the Jøssing Fjord they were boarded by Norwegian troops(I fear the name of the Norwegian ships elude me as I don't have my thesis in front of me). The Norwegians claimed and reported later to the British ships that they had inspected the ships.
What is not all that known, or at least spoken about loudly, is that a large number of Norwegian army and naval officers were members or voted for "National Gathering", the fascist party of Norway and whose leader, Vidkun Quisling, had several meetings in Germany and with Hitler as well to get him to invade Norway. They were very pro-Germany, meaning that it is just as likely that the Norwegians inspecting the ship just sat on the bridge and drank coffee/liquor with the German captain as it is that they conducted a full and thorough inspection of the ship. After all, there were 300 POWs on that ship, not something you just hide under your desk or in a cupboard. So if the inspection actually took place is one of the unanswered questions, although there are good reasons to believe it didn't happen.
When the British ships arrived in the fjord they were notified by the Norwegian ships that the Altmark had already been inspected so they could just sail away. The Norwegian ships are obligated to defend their neutrality according to international law, however this does not apply if the ones breaching the neutrality have superior firepower. So the Norwegian ships were allowed to let the British ships board Altmark and take control.
As for consequences the incident was used by the Germans as an example of Norway having given up its neutrality and side with the British. The Norwegian government tried to send protests left right and centre after the incident, but having spent the entirety of the 20's and 30's not giving two shits about their armed forces their military might was non-existent. The British mined Norwegian waters in April which gave the Germans a second reason to invade Norway(albeit an illegitimate one seeing as Norway still hadn't preformed an act of war against Germany).
Sorry for maybe going overboard, but when you spend a month researching this stuff for your thesis then you get a bit excited when you see someone asking about the incident =P