The British competition watchdog has stated that if the deal goes through, airlines will face higher prices and lower quality on-board Wi-Fi, while a key competitor will be removed from the market

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Viasat signed a $7.3bn deal in November 2021 to acquire Inmarsat. (Credit: Inmarsat Global Limited)

The UK Competition and Markets Authority (CMA) said that the $7.3bn acquisition of British mobile satellite communications services provider Inmarsat by Viasat would raise competition concerns in the UK.

The British competition watchdog stated that if the deal goes through, then airlines will face higher prices and lower quality on-board Wi-Fi, while a major competitor will be eliminated from the market.

The CMA has found 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.

According to the British competition regulatory authority, switching providers after installing a connectivity solution can be extremely challenging for airlines. Therefore, the CMA said that it is concerned that the combined business could effectively lock in a large chunk of the customer base before emerging suppliers are in a position to compete.

The phase 1 investigation into the merger was launched by the CMA in July 2022.

CMA Senior Director Colin Raftery said: “This is an evolving market, but the merging companies are currently 2 of the key players – and it remains uncertain whether the next generation of satellite operators will be able to compete against them effectively.

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

Inmarsat and Viasat have been given five working days to come up with proposals to address the concerns raised by the CMA. After this, the regulator will have a further five days to decide whether to accept any offer or refer the case for an in-depth phase 2 probe.

Last month, Viasat secured the UK government approval under the National Security & Investment Act for the Inmarsat deal.