UK To Probe Viasat’s Inmarsat Acquisition


In-depth phase two investigation of Viasat’s Inmarsat deal officially confirmed by UK regulator, after finding competition concerns last week

The British competition watchdog has confirmed it will deepen its investigation into the merger between US satellite operator Viasat and British satellite telecommunications company Inmarsat.

Last week the Competition and Market Authority (CMA) announced that the merger between Viasat and Inmarsat for $7.3 billion had raised competition concerns.

Last week’s announcement came after the European Commission in late July had signalled the deal would need its approval before it could be completed.

Causes for concern

Shortly after that, the CMA began a phase one investigation of the deal, and it soon found a problem.

The CMA said last week it had found Viasat’s merger with Inmarsat could lead to airlines facing higher prices for on-board Wi-Fi, and potentially worsen Wi-Fi quality on-board.

The CMA noted that demand for satellite connectivity is increasing rapidly, driven in large part by the ever-growing use of the internet by businesses and consumers, including through the increased use of data-intensive applications.

The deal brings together two of the strongest suppliers in a market with few other established players, despite plans by other players, such as Starlink, OneWeb, and Telesat, seeking to target the aviation sector.

The reality, the CMA said, is this is one of the most difficult industries for satellite operators to enter, and the CMA’s initial investigation has found that there is significant uncertainty about when – if at all – these suppliers would be in a position to compete effectively with Viasat and Inmarsat.

The CMA’s investigation also found that it can be very difficult for airlines to switch providers once they have installed a connectivity solution.

The CMA is therefore concerned that the merged company could effectively lock in a large part of the customer base before emerging suppliers are able to compete.

Phase two probe

Last week the CMA gave both firms 5 working days to consider whether to accept any offer, instead of referring the case for an in-depth Phase 2 investigation.

“The SLC Decision stated that the CMA would refer the Merger for a phase 2 investigation pursuant …if: no undertakings …were offered to the CMA by the end of this period (ie by 13 October 2022),” said the CMA.

“On 10 October 2022, the Parties informed the CMA that they would not offer such undertakings to the CMA,” it said.

This has therefore triggered the Phase two investigation.

Both Viasat and Inmarsat operate their own satellite networks and provide two-way satellite communication globally to commercial customers and governments.