The British competition watchdog, after a phase 1 investigation, concluded that the deal will result in airlines facing higher prices and lower quality on-board Wi-Fi and there is considerable uncertainty about when other suppliers in the aviation sector would be in a position to compete with Viasat and Inmarsat
CMA to undertake a phase 2 investigation into Viasat's acquisition of Inmarsat. (Credit: Inmarsat Global Limited)
The UK Competition and Markets Authority (CMA) has launched an in-depth investigation into Viasat’s $7.3bn acquisition of British mobile satellite communications services provider Inmarsat.
In its phase 1 investigation, the CMA concluded that the deal will significantly reduce competition in Britain.
According to the British competition regulator, the deal will result in airlines facing higher prices and lower quality on-board Wi-Fi, while a major competitor will be eliminated from the market.
The British watchdog concluded in its initial phase 1 probe that there is considerable uncertainty about when other suppliers in the aviation sector would be in a position to effectively compete with Viasat and Inmarsat.
The phase 1 investigation into the merger was launched by the CMA in July this year and arrived at the conclusion earlier this month.
After the conclusion of the phase 1 probe, the satellite communications services providers informed the regulator that it will not offer any undertakings to it that could address its concerns.
UK CMA mergers senior director Colin Raftery said: “On 10 October 2022, the Parties informed the CMA that they would not offer such undertakings to the CMA.
“Therefore, pursuant to section 33(1) and in accordance with section 34ZA(2) of the Act, the CMA has decided to refer the Merger to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to conduct a phase 2 investigation.”
Viasat and Inmarsat announced their stock cum cash deal in November last year.
As per the terms of the deal, Inmarsat’s shareholders will get $850m in cash and nearly 46.36 million newly issued shares of Viasat valued at $3.1bn.
The deal, which was originally expected to close in the second half of this year, remains to be subject to customary closing conditions and regulatory reviews.