The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed acquisition of Inmarsat by Viasat.
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The Commission is concerned that the transaction may allow Viasat to reduce competition in the market for the supply of broadband in-flight connectivity (‘IFC') services to commercial airlines.
Viasat and Inmarsat are providers of satellite-based communication services. Viasat owns and operates four geostationary earth orbit (‘GEO') satellites and Inmarsat owns and operates fifteen GEO satellites.
Both companies are close competitors and rely on capacity from their own GEO satellites to provide services in the nascent market for the supply of broadband IFC services to commercial airlines in the European Economic Area (‘EEA') and globally.
The Commission's preliminary investigation shows that:
• The parties are close competitors in the EEA or global markets for the supply of broadband IFC services to commercial airlines. In those markets, the parties compete head-to-head in tenders for IFC contracts, in particular in the EEA.
• There are currently few alternative suppliers, and the markets are characterised by relatively high barriers to entry, such as regulatory and technological.
• The satellite market is undergoing a transition with operators of non-geostationary satellites having entered or planning to enter the IFC market. The Commission plans to further investigate whether those new players are likely to exert sufficient competitive pressure on the merged entity in the near future.
At this stage, the Commission is therefore concerned that by acquiring Inmarsat, Viasat may reduce competition in the supply of broadband IFC services to commercial airlines in the EEA and/or globally.
The Commission will therefore now carry out an in-depth investigation into the effects of the transaction to determine whether its initial competition concerns are confirmed.
The proposed transaction was notified to the Commission on 9 January 2023. ■