Photo: Via Satellite/Freepik.com/Wavebreak Media

After two phases of review, the United Kingdom’s Competition and Markets Authority (CMA) regulatory authority has granted its approval for the Viasat and Inmarsat merger to go forward. 

An in-depth investigation released Tuesday found that the companies compete closely in the in-flight connectivity (IFC) market, but the deal would not substantially reduce competition for services on flights for U.K. customers. It cited growing competition from Starlink, along with advances from Intelsat, Panasonic, and OneWeb that will increase competitive pressure in the coming years. 

An independent CMA panel performed the investigation about the potential impact on the sector and how the market might change in the future, after the Phase 1 investigation was released in October. 

“After carefully scrutinizing the deal, we are now satisfied that, following the merger, these developments will ensure that both airlines and their U.K. customers will continue to benefit from strong competition,” commented Richard Feasey, chair of the inquiry group. 

The CMA review looked at the demand and competitive environment for IFC. The review looked at recent tenders, internal documents from Viasat and Inmarsat and competitors, and feedback from airlines and OEMs. 

In commercial aviation, it found that Starlink is likely to be a “significant constraint” on the combined company as it grows its IFC business. It cited Starlink winning recent contracts from a mix of airline customers, including European airline airBaltic, which will fly to and from the U.K. 

Most airlines told the CMA inquiry that Starlink is a strong or very strong supplier of IFC, and the review said some airlines have used Starlink as leverage to get better terms from Viasat and/or Inmarsat. 

“Although we recognize that there is necessarily a degree of uncertainty regarding the pace and scale of Starlink’s expansion in IFC, we expect Starlink to become a stronger competitor to the merged entity within the next few years as it launches additional satellites, obtains more certifications, gains more experience and data from serving customers and can demonstrate to other potential customers that its technology is mature,” the report said. 

In terms of existing suppliers, the CMA review also expects greater competition from both Intelsat and Panasonic, as both have agreements with OneWeb to debut hybrid Geostationary Orbit (GEO) and Low-Earth Orbit (LEO) IFC services. 

Viasat said Tuesday that the merger has now received clearance from the U.K. government under the National Security and Investment Act and the CMA, as well as the Australian government’s Foreign Investment Review Board (FIRB) and the Committee on Foreign Investment in the United States.

Viasat CEO Mark Dankberg called the approval a “critical step” in securing final approvals. “The decision validates our position that the combination of our two companies will strengthen competition in a dynamic market that continues to attract substantial levels of investment and enables us to offer better services to our customers,” Dankberg said.

Viasat also has a pending investigation by the European Commission (EC), which faces a June 29 deadline to come to a decision on Viasat’s merger and its concerns it will hurt competition in the IFC market. 

The operator said in its third quarter results in February that the merger could “close quickly” depending on CMA and EC reviews.