CMA clears Viasat/Inmarsat merger
May 9, 2023
By Colin Mann
Following a provisional clearance in March 2023, the UK’s Competition and Market Authority (CMA) is now allowing the proposed merger of Viasat and Inmarsat to go ahead.
Both Viasat and Inmarsat supply businesses globally with satellite connectivity that enables services such as the Internet, email, and video calling – including for use on aircraft.
In October 2022, the CMA referred the deal to a Phase 2 review after its initial, Phase 1, inquiry identified concerns that warranted further investigation.
Since then, an independent CMA panel has gathered and analysed a wide range of evidence in order to understand the sector, as well as the potential impact of the merger. Amongst other things, this included a significant number of internal documents – from both the merging companies and their competitors – evidence from airlines; the CMA’s own analysis of sector conditions; and how these could change in the future.
In a Phase 2 review, the panel considers whether it is more likely than not that a deal will substantially lessen competition – a higher threshold than Phase 1. Accordingly, some mergers that are referred to Phase 2 will ultimately be cleared.
The evidence analysed by the panel shows that, while Viasat and Inmarsat compete closely– specifically in the supply of satellite connectivity for WiFi on flights – the deal does not substantially reduce competition for services provided on flights used by UK customers.
The evidence also shows that the satellite sector is expanding rapidly – a trend that is set to continue for the foreseeable future. This is due to increased demand for satellite connectivity, driven largely by the ever-growing use of the internet by business and consumers.
A number of new operators have recently entered, or are planning to enter, the satellite communications sector to offer connectivity services for aircraft – these include Starlink, operated by SpaceX. Since the start of the CMA’s Phase 2 review, the firm has launched a significant number of new satellites into space and secured its first contract with a European airline (airBaltic).
Established players – including Panasonic and Intelsat – are also investing and entering into new sector partnerships. For example, both companies have signed agreements with recent entrant OneWeb, which completed its global satellite constellation last month, allowing them to use OneWeb satellites to enhance their own offerings to airlines.
“The satellite communications sector is evolving at rapid pace – new companies are entering the market, more satellites are being launched into space, and firms are exploring and entering into new commercial deals,” notes Richard Feasey, chair of the inquiry group carrying out the Phase 2. “All the evidence has shown that the sector will continue to grow as the demand for satellite connectivity increases.”
“After carefully scrutinising the deal, we are now satisfied that, following the merger, these developments will ensure that both airlines and their UK customers will continue to benefit from strong competition.”
“We’re delighted with the CMA’s decision to unconditionally clear the deal to acquire Inmarsat, as it represents a critical step in securing final approvals to complete this transaction,” said Mark Dankberg, Chairman and CEO, Viasat. “The decision validates our position that the combination of our two companies will strengthen competition in a dynamic market that continues to attract substantial levels of investment and enables us to offer better services to our customers. Additionally, this deal will also create new high-skill technology jobs, deepen Viasat’s capabilities in the UK, and ultimately help to deliver the goals of the UK’s National Space Strategy. I appreciate the extensive review by the CMA to review this transaction and thank them for their efforts.”
Rajeev Suri, Chief Executive Officer at Inmarsat, said: “Today’s decision by the CMA to clear the Viasat-Inmarsat deal is hugely significant for the UK’s space ambitions and customers everywhere. We would like to thank the CMA Independent Panel and Case Team for their diligent work on the review and for recognising that in today’s fast changing satellite communications sector the needs of customers will continue to be well served.”
The companies will continue to work through other regulatory approvals and update on transaction close timing as those processes continue.