EC opens in-depth investigation into the proposed acquisition of Inmarsat by Viasat

The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed 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.

Viasat and Inmarsat are providers of satellite-based communication services. Viasat owns and operates four geostationary earth orbit (‘GEO’) satellites and Inmarsat owns and operates fifteen GEO satellites. Both companies are close competitors and rely on capacity from their own GEO satellites to provide services in the nascent market for the supply of broadband IFC services to commercial airlines in the European Economic Area (‘EEA’) and globally.

The Commission’s preliminary concerns
The Commission’s preliminary investigation shows that:

• The parties are close competitors in the EEA or global markets for the supply of broadband IFC services to commercial airlines. In those markets, the parties compete head-to-head in tenders for IFC contracts, in particular in the EEA.
• There are currently few alternative suppliers, and the markets are characterised by relatively high barriers to entry, such as regulatory and technological.
• 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 on the merged entity in the near future.

At this stage, the Commission is therefore concerned that by acquiring Inmarsat, Viasat may reduce competition in the supply of broadband IFC services to commercial airlines in the EEA and/or globally.

The Commission will therefore now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.

The proposed transaction was notified to the Commission on 9 January 2023. The Commission now has 90 working days, until 29 June 2023, to take a decision. The opening of an in-depth inquiry does not prejudge the outcome of the investigation.

Companies and products
Viasat, headquartered in the US, is a vertically integrated satellite network operator and satellite services provider. Viasat owns and operates four GEO satellites. In addition, Viasat leases capacity on third-party satellites. Viasat has three core business segments: satellite services, commercial networks, and government systems.

Inmarsat, headquartered in the UK, is a vertically integrated satellite network operator and satellite services provider. Inmarsat owns and operates three proprietary satellite networks across its fleet of fifteen GEO satellites. Inmarsat’s business is organised into four customer segments: aviation, maritime, enterprise, and government

Merger control and procedure
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). BCS Bureau