Competition watchdog launches full-blown probe of takeover of one of Britain’s leading satellite businesses

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A foreign takeover of one of Britain’s leading satellite companies has faced another setback as the competition watchdog launched a full-scale investigation.

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US giant Viasat had hoped to complete its £5.6bn purchase of competitor Inmarsat before the end of the year.

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The Competition and Markets Authority (CMA) conducted a “phase one” investigation due to concerns that it could harm consumers.

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Off course: US giant Viasat had hoped to complete its £5.6bn purchase of rival Inmarsat before the end of the year.

Last week, the watchdog gave satellite firms five days to delay a “phase two” investigation by offering proposals to address their concerns.

But the companies failed to find a solution, and as a result, the CMA said yesterday that the deal would be subject to a thorough investigation, adding that the takeover would “remove a key competitor from the market.”

This could result in airlines facing higher prices and poorer in-flight Wi-Fi. CMA Senior Director Colin Raftery said: “This is an emerging market, but merging companies are currently two of the key players and it remains unclear whether the next generation of satellite operators will be able to effectively compete with them.

“Ultimately, airlines could face a worse deal from this merger, which could have indirect repercussions for UK consumers as on-board communications become more common.”

Viasat said it “looks forward” to working with CMA on the investigation.

Inmarsat chief executive Rajeev Suri said the firm faces “tough competition every day” to provide in-flight communications services. He added that the UK would “benefit a lot” from a merger of the two companies that would create a “strong” satellite firm.

But an in-depth investigation could either block the deal or force Inmarsat and Viasat to split some of their business. The investigation will run for 24 weeks and competitors, including satellite operator Elon Musk’s Starlink, will be asked to share their concerns.

A competition lawyer told the Granthshala that mergers are “increasingly rare” to receive full approval in the second phase of the investigation, raising the possibility that it could be blocked.

In addition to the competition investigation, the deal was subject to a lengthy national security investigation. But Business Secretary Jacob Rees-Mogg last month cleared the deal under the Homeland Security and Investment Act, leaving CMA clearance as the last major hurdle to regulation in the UK.

The deal is also being scrutinized by the European Union’s competition watchdog and authorities in the countries where Inmarsat and Viasat operate around the world.

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