The UK Competition and Markets Authority (CMA) raised concerns about a proposed combination of satellite connectivity players Viasat and Inmarsat, as the companies vowed to attempt to persuade the regulator the union had positive implications.

In its initial findings published today (6 October) the CMA citied concerns of a potential reduction of quality and higher prices for in-flight connectivity systems bought by the aviation industry, especially passenger Wi-Fi.

The authority claimed the businesses competed especially closely in this segment, where it concluded they were among the strongest players in an area with few established options.

“Although new players, such as [SpaceX’s] Starlink, OneWeb and Telesat are seeking to target the aviation sector, this is one of the most difficult industries for satellite operators to enter, and the CMA’s initial investigation has found that there is significant uncertainty about when, if at all, these suppliers would be in a position to compete effectively with Viasat and Inmarsat.”

Viasat announced its intention to buy rival Inmarsat in November 2021 for $7.3 billion, with the UK competition authority commencing an initial investigation into the potential impact nine months later.

Deep space probe
The companies have five days to address the CMA’s concerns or risk a Phase 2 investigation, where the authority can propose remedies of its own or impose measures ranging in severity.

However, in a joint statement, Viasat and Inmarsat seemed resigned to the deeper probe being launched.

Viasat CEO and executive chairman Mark Dankberg said given the great interest in affordable in flight connectivity (IFC) “the CMA’s decision to proceed to a Phase 2 review is not unexpected, even though IFC represents less than 10 per cent of the revenues of the combined company”.

“This is still a nascent, dynamic and rapidly evolving business, with existing providers and extremely well-financed new entrants bringing new technologies and new business models to increase adoption among airlines, passengers, and aircraft types.”

“We intend to work closely with the CMA to show that our transaction will benefit customers by improving efficiencies, lowering costs and increasing IFC availability around the world”.