US takeover of Inmarsat faces in-depth probe

The foreign takeover of one of Britain’s leading satellite businesses faced a fresh setback as the competition watchdog launched a full-blown probe. 

US giant Viasat was hoping to complete the £5.6billion purchase of rival Inmarsat before the end of the year. 

It had been through a ‘phase one’ investigation by the Competition and Markets Authority (CMA) over fears it could lead to a hit for consumers. 

And the watchdog last week gave the satellite firms five days to stave off a ‘phase two’ inquiry by offering proposals to address its concerns. 

But the companies failed to come up with a solution and as a result the CMA said yesterday the deal would face an in-depth investigation, adding that the takeover would ‘remove a key competitor from the market’. 

This could lead to airlines facing higher prices and worse quality WiFi on board planes, the watchdog said. The CMA’s senior director Colin Raftery said: ‘This is an evolving market, but the merging companies are currently two 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 inflight connectivity becomes more widespread.’ 

Viasat said it is ‘looking forward’ to working with the CMA on its investigation. 

Inmarsat boss Rajeev Suri said the firm faces ‘intense competition every day’ in offering in-flight connectivity. He added that the UK has ‘much to gain’ from a merger of the two which would create a ‘strong’ satellite firm. 

But the in-depth probe could either lead to the deal being blocked or with Inmarsat and Viasat having to hive off parts of their business. The investigation will take 24 weeks and will see rivals – which include Elon Musk’s Starlink satellite operator – invited to share their concerns. 

A competition lawyer told the Daily Mail it is ‘increasingly rare’ for mergers to get complete approval from a phase two inquiry – raising the prospect it could be blocked. 

As well as the competition probe, the deal faced a lengthy investigation on national security grounds. But Business Secretary Jacob Rees-Mogg last month cleared the tie-up under the National Security and Investment Act, leaving CMA clearance as its last major UK regulatory hurdle. 

The deal is also being looked at by the European Union’s competition watchdog and authorities where Inmarsat and Viasat operate globally.