EU probes in-flight connectivity impact of Viasat Inmarsat acquisition

The European Commission has opened an in-depth investigation into the proposed acquisition of Inmarsat by Viasat, fearing it might harm competition in the in-flight connectivity market.

Viasat unveiled its $7 billion swoop all the way back 2001 and must be frustrated by the fact that it has taken the EC over a year to look into the deal and come to the conclusion that it needs to look into it a bit more. Even by EC standards this feels like glacial progress and it’s very difficult to imagine how it takes a year’s worth of contemplation to get to this point.

“In-flight connectivity is a nascent and growing market in Europe,” said Margrethe Vestager, Commissioner in charge of competition policy. “Viasat and Inmarsat are two leading suppliers of connectivity services during flights and they compete head to head to serve European airlines. With our in-depth investigation, we aim to ensure that the acquisition of Inmarsat by Viasat does not lead to higher prices and lesser quality for in-flight connectivity services on flights in Europe.”

Surely this is just a simple matter of calculating what the European in-flight connectivity market share of the combined entity would be and deciding if that’s too big. Anything above 50% would seem to be a good starting point. There you go, Margrethe, we just saved several more months of agonising. You’re welcome.

The announcement list outline what the EC’s sleuths have uncovered so far:

  • 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.

You can see why they get the big bucks. Puzzlingly, the announcement goes on to say “The proposed transaction was notified to the Commission on 9 January 2023. The Commission now has 90 working days, until 29 June 2023, to take a decision.” So we’re supposed to believe the whole thing wasn’t even on the EC’s radar for over a year after it was publicly announced.

Political bureaucracies like the EC like to go on about how they want their constituents to be world leaders in various areas of industry and policy, but this kind of wilful foot-dragging must surely hinder such ambitions. It serves nobody for them to take so long over this sort of thing and just adds to the impression that the EC cares more about exercising its own power then it does about the commercial success of the EU.


Get the latest news straight to your inbox. Register for the newsletter here.

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.