LONDON (Reuters) - Britain's competition regulator said on Thursday Viasat's $7.3 billion takeover of satellite rival Inmarsat could hamper competition and lead to airlines facing higher prices for on-board wifi, raising the prospect of the deal being delayed.
U.S.-based Viasat's plan to buy Britain-based Inmarsat, announced in late 2021, was given security clearance by Britain last month and the United States in the summer, but the deal could now face an in-depth probe from the UK watchdog.
Viasat said the part of the business the regulator was considering, In Flight Connectivity, represented less than 10% of the revenues of the combined company and it would work to show the regulator how the deal would benefit users.
It also offers connectivity services to residential, aviation and defence customers in North America, while Inmarsat is a provider of satellite-based communications services to shipping, aviation and government departments, including Britain's Ministry of Defence.
Viasat expects to close the deal in the second half of 2022, but the companies said on Thursday they would communicate any delay to that timeline as their engagement with Britain's Competition and Markets Authority (CMA) progresses.
The watchdog said its concern was that airlines could face a worse deal due to the loss of competition and that could be bad for British consumers and businesses as in-flight wifi becomes more widespread.
In response, Inmarsat Chief Executive Rajeev Suri said in a statement there was "no lack of competition in satellite connectivity for the aviation sector."
The companies now have five working days to submit proposals to address the concerns, said the CMA, after which it had a further five days to consider whether to accept them or refer the case for an in-depth probe.