UK: Inmarsat Takeover Provisionally Cleared For Take-Off

On 1^st March 2023, the Competition & Markets Authority ("CMA") provisionally cleared the anticipated takeover by Viasat Inc. of Inmarsat Group Holdings Limited. The takeover shall see Viasat Inc. acquire 100% of Inmarsat's issued share capital and the aggregate consideration is valued at $7.3 billion. The completion of this proposed acquisition is conditional upon approvals from the CMA and European Commission. The relevant authorities acknowledge the indisputable fact that both parties have been growing faster than other established suppliers of inflight connectivity ("IFC") services, they regularly bid against each other in tenders, and are each recognised as dominating rivals in the market.

Although, whilst the entities do compete closely in the aviation sector, the CMA revealed in their report that the proposed deal is not "expected to result in a substantial lessening of competition ("SLC") in the supply of broadband IFC services to commercial aviation or business aviation customers serving in the UK".

The CMA was able to reach these findings based on a confident expectation of upcoming growth in the satellite sector that is driven in large by the ever-growing demand for the internet by businesses and consumers, both at home and whilst travelling. The CMA emphasise in their report that the satellite sector has recently seen, "and is likely to continue to see disruptive entry by new players with innovative technologies and substantial resources, while established providers are also responding to these threats and opportunities in various ways".

The CMA thus highly anticipate that, despite the substantial concentration that this takeover may generate, there will still be impactful competitors in the market that Inmarsat will come up against, including existing players such as Intelsat and Panasonic, and newer entrants like Starlink (operated by SpaceX). This implies that airlines will not fall short of choices when selecting service providers, and so customers will also not be adversely affected by a consequential surge of on-board Wi-Fi prices.

The CMA also emphasised in their assessment that airlines are generally sophisticated and flexible customers "that are highly engaged with the IFC market" and thus can be expected to preserve their ability to make sensible supplier choices, despite the overwhelming market share that Inmarsat may hold immediately post-acquisition.

Albeit the deal is far from done, as the floor remains open for interested parties to submit their feedback to the CMA until 21^st March, prior to the issuance of the final report, which is expected on 30^th March.

Meanwhile, the proposed takeover is yet to win EU approval, as the European Commission are still undergoing their own scrutinous investigation of the potential anti-competitive consequences and are expected to give their decision on the later date of 29^th June.

Find the Competition & Market's Authority Provisional Findings Report here.

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