The UK firm Inmarsat’s takeover by US firm Viasat for 5.4 billion has been cleared by the Competition and Markets Authority (CMA). The CMA’s investigation launched in October 2022 aimed to evaluate the merger’s impact on competition in the satellite sector, primarily assessing the potential increase in airline’s wifi prices. However, the CMA’s scrutiny discovered the satellite communications industry was expanding due to an increase in demand, ensuring competition and low pricing for customers.
The Expansion of the Satellite Communications Industry
The CMA’s in-depth investigation found the satellite communications industry expanding, primarily due to rising internet usage by businesses and individuals. The demand for satellite connectivity has increased, and the industry has witnessed several new companies entering the market. The new entrants have been investing heavily, and the likes of Panasonic and Intelsat have signed agreements with new rivals OneWeb to use its satellite fleet. The competition watchdog concluded that the sector would continue to grow as the demand for satellite connectivity increased.
Merger Impact on Competition
The CMA was tasked with evaluating the impact of the 5.4 billion takeover of UK firm Inmarsat by US firm Viasat on competition in the satellite sector. Concerns were raised that the merger could lead to airlines facing higher prices for wifi on board. However, the competition watchdog found the satellite communications sector was expanding, and the merger would not limit competition. Additionally, the CMA gathered evidence indicating that new players, including Elon Musk’s Starlink, were entering the market, acting as rivals to the merged firm, meaning prices would remain low.
Continued Benefits for Airlines and UK Customers
The CMA concluded that the merger of Inmarsat and Viasat would ensure that both airlines and their UK customers would continue to benefit from strong competition. The competition watchdog highlighted that both companies supplied businesses worldwide with satellite connectivity, allowing services such as the internet, email, and video calling to run, including on aircraft. The sector’s expansion meant that the merged company would not monopolize the market and push up prices for customers, allowing airlines and UK customers to benefit from strong competition.
In conclusion, the Competition and Markets Authority’s green light for the Inmarsat-Viasat merger means the UK and US firms can proceed with the 5.4 billion takeover. The merger’s impact on competition in the satellite sector was the main focus of the CMA’s investigation, and their conclusion was that the industry was expanding, ensuring low prices for customers. The satellite communications industry has witnessed several new entrants and established firms, such as Panasonic and Intelsat, investing heavily and signing agreements with new rival OneWeb to use its satellite fleet. The CMA’s conclusion means that the merger of Inmarsat and Viasat will not limit competition, and both airlines and UK customers will continue to benefit from strong competition.
Frequently Asked Questions
What is Inmarsat?Inmarsat is a global satellite communications company based in the UK. It provides mobile and fixed satellite services to governments, airlines, shipping companies, and other businesses around the world.
What is Viasat?Viasat is a global communications company based in the US. It provides a range of services, including satellite broadband internet, military communication systems, and in-flight wifi services to airlines.
What is the Competition and Markets Authority?The Competition and Markets Authority (CMA) is a UK government organization responsible for promoting competition in markets and preventing anti-competitive activities. It investigates mergers, acquisitions, and other business practices that could harm competition and consumers in the UK.
What is Starlink?Starlink is a satellite internet service operated by SpaceX, a company founded by billionaire Elon Musk. It provides broadband internet services to customers around the world, including in remote and underserved areas.
What is OneWeb?OneWeb is a global satellite internet company that provides connectivity solutions to businesses and governments around the world. It has a fleet of low-Earth orbit satellites that provide high-speed internet access to customers on the ground.