US takeover of Inmarsat faces in-depth probe

The foreign takeover of one of Britain’s largest satellite companies faced another setback when the competition watchdog launched a full investigation.

US giant Viasat hoped to complete its £5.6 billion purchase of rival Inmarsat before the end of the year.

It had undergone a ‘phase one’ investigation by the Competition and Markets Authority (CMA) over fears it could lead to a hit for consumers.

And the watchdog gave the satellite firms five days last week to avert a “phase two” investigation by making proposals to allay their concerns.

But the companies failed to come up with a solution and as a result, the CMA said yesterday that the deal would undergo an in-depth investigation, adding that the acquisition would “remove a major competitor from the market.”

This could lead to airlines facing higher prices and poorer quality Wi-Fi onboard planes, the watchdog said. The CMA’s senior director, Colin Raftery, said: “This is an evolving market, but the merging companies are currently two of the key players – and it remains uncertain whether the next generation of satellite operators will be able to effectively counter them.” compete.

“Ultimately, airlines could face a worse deal because of this merger, which could have a knock-on effect for UK consumers as in-flight connectivity becomes more widespread.”

Viasat said it is “looking forward” to partnering with the CMA on its investigation.

Inmarsat boss Rajeev Suri said the company faces “intense competition every day” in offering in-flight connectivity. He added that the UK has “a lot to gain” from a merger of the two, which would create a “strong” satellite company.

But the in-depth investigation could lead to the deal being blocked or Inmarsat and Viasat having to divest parts of their business. The investigation will last 24 weeks and rivals, including Elon Musk’s Starlink satellite operator, will be invited to share their concerns.

A competition lawyer told the Daily Mail that it is “increasingly rare” for mergers to receive full approval from a phase two investigation – raising the prospect that it could be blocked.

In addition to the competition investigation, the deal faced a lengthy investigation for national security reasons. But Economics Secretary Jacob Rees-Mogg ended the deal under the National Security and Investment Act last month, leaving the CMA approval the last major hurdle to UK regulation.

The deal is also under review by the European Union’s competition watchdog and the authorities where Inmarsat and Viasat operate worldwide.