European Commission launches investigation into Viasat-Inmarsat deal

Margrethe Vestager

Margrethe Vestager

The European Commission has opened an in-depth investigation to assess the proposed $7.3bn acquisition of Inmarsat by Viasat. The Commission 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 deal was first proposed around 18 months again and is already the subject of an in-depth investigation by the UK’s Competition & Market Authority. Commenting on the EC’s decision to follow suit, Margrethe Vestager, EVP in charge of competition policy, said: “In-flight connectivity is a nascent and growing market in Europe. Viasat and Inmarsat are two leading suppliers of connectivity services during flights and they compete head to head to serve European airlines.  With our in-depth investigation, we aim to ensure that the acquisition of Inmarsat by Viasat does not lead to higher prices and lesser quality for in-flight connectivity services on flights in Europe.

The Commission identified three concerns. Firstly, that the two firms are close competitors in the European Economic Area (EEA) and global markets for the supply of broadband IFC services. Secondly, there are currently few alternative suppliers, and the markets are characterised by high barriers to entry. Finally, 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.

The Commission will now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed. It has 90 working days, until 29 June 2023, to take a decision. The EC stressed that the “opening of an in-depth inquiry does not prejudge the outcome of the investigation”.

Viasat and Inmarsat have said that will work with the regulatory agencies to address their concerns. Viasat, which faces competition in the IFC market from Panasonic and Intelsat, had hoped to complete the deal by the end of the year. The company claims that the merger would increase efficiencies and make IFC more affordable, faster and reliable.

When the CMA announced plans to launch an in-depth investigation the deal Viasat CEO Mark Dankberg argued that the transaction “will benefit the nascent, but rapidly growing IFC services available to airline passengers.”

In addition to this investigation, the EC is also looking at Vivendi’s proposed acquisition of Lagardere and Microsoft’s planned purchase of Activision Blizzard (among others).

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