Europe Begins Deeper Probe Into Viasat, Inmarsat Merger

The European Commission is to probe more deeply Vista's proposed $7.3 billion buy of fellow satellite maker Inmarsat on the back of worries about the potential reduction of competition for in-flight Wi-Fi connectivity.

This is a further blow for both companies, which have waited to consummate their marriage since November 2021 when the merger talks were made public. The UK's Competition and Markets Authority signaled some months back that it too is taking a closer look at the tie-up.

Currently, US-headquartered Viasat and UK-based Inmarsat each own and operate four and 15 geostationary earth orbit (GEO) satellites respectively, relying on those constellations to provide in-flight connectivity (IFC) to commercial airliners.

After a preliminary investigation, the EC has now voiced "concerns" about three points: the two go head to head in tenders as close rivals; there are few suppliers in general and high regulatory or technological barriers to entry exist; and the satellite market is in a state of flux, with new non-geostationary rivals entering or planning to enter IFC market – although the Commission is unsure what competitive pressure they'll exert.

Starling, OneWeb, and Telecast are the other market entrants.

As such, the EC is uneasy about supply of in-flight broadband services within the European Economic Area and plans to scrutinize things more closely to determine if its initial concerns are justified.

"In-flight connectivity is a nascent and growing market in Europe," said Margrethe Vestager, EC executive veep in charge of competition policy. "With our in-depth investigation, we aim to ensure that the acquisition of Inmarsat by Viasat does not lead to higher price and lesser quality for in-flight connectivity services on flights in Europe."

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The Commission has 90 days to make a decision on the merger, and it was at pains to state that the opening of a deeper review does not prejudge the outcome of that work.

In a joint statement, Viasat and Inmarsat acknowledged the start of the Phase 2 investigation by the EC.

"We remain committed to continuing engagement with the European Commission and are confident that they proposed combination will strengthen competition in the growing satellite communications market and enable the combined group to offer innovative new services to its customers in Europe and around the world." ®