Competition & Markets Authority
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Satellite merger approved after in-depth CMA probe

Following a provisional clearance in March, the CMA is now allowing the proposed merger of Viasat and Inmarsat to go ahead.

  • Phase 2 investigation finds that – while Viasat and Inmarsat compete closely – the merged company will be challenged by emerging and established competitors in coming years
  • Satellite communications sector is expanding, a trend that is expected to continue

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.

Last October, the Competition and Markets Authority (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.

Richard Feasey, chair of the inquiry group carrying out the Phase 2, said:

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. 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.

For more information, visit the Viasat / Inmarsat merger inquiry page.

Notes to Editors:

  1. For media enquiries, contact the CMA press office on 020 3738 6460 or press@cma.gov.uk.
  2. The Secretary of State for Business, Energy and Industrial Strategy carried out a separate investigation and made a final order pursuant to section 26 of the National Security and Investment Act 2021 to provide assurance that (i) controls are in place to protect information from unauthorised access and (ii) strategic capabilities continue to be provided by Inmarsat and Viasat to the UK government.
  3. Viasat owns and operates a network of geo-stationary satellites and provides satellite connectivity services for use in consumer, commercial, and government applications. Viasat also provides communications and cybersecurity products and services, and manufactures and supplies equipment and network technology for satellite connectivity services.
  4. Inmarsat owns and operates a network of geo-stationary satellites and provides broadband and narrowband connectivity services for government and commercial applications.
  5. Viasat entered into a share purchase agreement with Inmarsat’s shareholders on 8 November 2021 pursuant to which Viasat agreed to indirectly acquire 100% of Inmarsat’s issued share capital.
  6. All enquiries from the general public should be directed to the CMA’s General Enquiries team on general.enquiries@cma.gov.uk or 020 3738 6000.

 

Channel website: https://www.gov.uk/government/organisations/competition-and-markets-authority

Original article link: https://www.gov.uk/government/news/satellite-merger-approved-after-in-depth-cma-probe

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