Viasat, Inmarsat deal hits EU antitrust buffer
February 14, 2023
Viasat’s $7.3 billion attempt to acquire London-based Inmarsat has hit a potential problem following an “in-depth” investigation by the a European Commission (EC), which says it is “concerned that the transaction may allow Viasat to reduce competition in the market for the supply of broadband in-flight connectivity (IFC) services to commercial airlines”.
The Viasat/Inmarsat deal, first announced in November 2021, is already subject to a similar in-depth investigation by the UK’s Competition & Markets Authority (CMA). The CMA must issue its final report by the end of March. The proposed transaction was only filed with the EC on January 9th. The EC investigation has 90 working days until June 29th for its decision.
The EC and CMA have similar concerns. The EC said its concerns stem from Viasat and Inmarsat’s standing as close competitors in Europe and globally for the supply of broadband inflight connectivity (IFC) services to commercial airlines. The EC said there were few alternative IFC suppliers while technological and regulatory barriers would make it difficult for any new players to enter the market.
The commission said it would also be investigating whether operators of non-geostationary satellites were likely to exert sufficient competitive pressure on the merged entity in the near future.
This comment is designed to examine whether the likes of Elon Musk’s Starlink, or the UK/India-backed OneWeb might prove to be competitive entrants into the IFC market.
The EC says:
- The parties are close competitors in the EEA or global markets for the supply of broadband IFC services to commercial airlines. In those markets, the parties compete head-to-head in tenders for IFC contracts, in particular in the EEA.
- There are currently few alternative suppliers, and the markets are characterised by relatively high barriers to entry, such as regulatory and technological.
- The satellite market is undergoing a transition with operators of non-geostationary satellites having entered or planning to enter the IFC market. The Commission plans to further investigate whether those new players are likely to exert sufficient competitive pressure on the merged entity in the near future.
Both Viasat and Inmarsat in public statements say that they will work with these regulatory agencies to resolve their anxieties.