ALEX BRUMMER: Satellite deal falls to Earth

US satellite champion Viasat may have felt it was home and dry when it persuaded the Business Department to sign off on its £5.6billion bid for British space pioneer Inmarsat.

But, as that great American sage Yankees manager Yogi Berra once noted, the ‘game ain’t over until it’s over’.

Britain’s Competition & Markets Authority (CMA) is looking after the interests not just of UK consumers, but global users of in-flight internet connections, by objecting to the deal. 

Probe: The Competition & Markets Authority is looking after the interests of UK consumers and global users of in-flight internet connections, by objecting to the Inmarsat takeover

In-flight internet may only represent 10 per cent of the current turnover of the joint business, but it is the big growth market for satellite communications.

Moreover, it was British scientists and technicians at Inmarsat who were pioneers in this technology and could not but fall under the command and control of their Californian masters.

As concerning is that Rick Baldridge, the Viasat executive who parked himself in the UK and conducted most of the negotiations with the authorities, no longer appears to be the point person. 

Viasat CEO and executive chairman Mark Dankberg is leading the response. In its notice, the CMA pulls no punches. It argues that both companies are in expansion mode, sending ever more satellites into space and competing aggressively for new business. 

In fact, the two firms are seeking many of the same clients in the still nascent market for on-board aviation services. Removing one competitor from the mix would give the combined company more pricing power.

Incidentally, many of the same arguments could be deployed in Vodafone’s effort to gain control of the UK’s mobile network Three.

The CMA has given Viasat five days to come up with a response before a full investigation – which could take months to complete – is undertaken. 

In the recent past, competition interventions – such as when US chip designer Nvidia sought to buy Arm Holdings – effectively killed the deal. Viasat argues that there is huge investment going into satellites.

Monoliths such as Elon Musk’s Starlink and currently the Government-backed OneWeb are launching large networks of low orbit satellites which could become competitors. 

What is not known is whether these newer, lower orbit satellites will be as capable as Viasat and Inmarsat in developing the on-board aviation technology.

Nevertheless, one should never discount the ability of Musk to disrupt as he has done so effectively in the motor industry and currently is planning to do in social media with the acquisition of Twitter.

This paper’s concerns about the Viasat/Inmarsat takeover have been much broader. For too long UK governments, in their determination to maintain one of the most open economies in the world, have offered a welcome mat to overseas takeovers.

Britain’s control over technology developed in our universities and backed by UK venture capital has vanished over the horizon. 

Among the victims have been Arm, aerospace pioneers Cobham and Meggitt, submarine sonar developer Ultra Electronics and many more.

Not only has this stunted the UK’s ability to develop its own thriving domestic tech sector, it has diminished the role of UK headquarters and seen patents and valuable R&D fall into foreign hands. 

Kwasi Kwarteng and the Treasury should also note that too often we are exchanging a one-off flow of global capital for a permanent drain on the corporate tax base as profits are diverted to lower tax regimes.

That is among the reasons why rolling back the proposed 25 per cent corporation tax break and keeping it at 19 per cent was so important. 

But this is an argument which has not been heard at all from the blob which chose to demonise lower taxes.

It is not just Inmarsat and competition which is endangered by an overseas takeover. OneWeb and French rival Eutelsat have also signed a merger agreement. It may be a perfectly sensible deal given the strength of rivals in the satellite orbit. 

However, it goes without saying that this too needs careful examination by the Business Department under Jacob Rees-Mogg and the CMA. 

If Viasat and Inmarsat wanted to satisfy the CMA rapidly, they could perhaps volunteer to dispose of either one of the on-board aviation internet franchises.

No such solution is contemplated. That is not surprising. The Inmarsat tech is the crown jewel of the sector, and having come this far, its Californian rival is not willing to make further concessions just yet.

This post first appeared on Dailymail.co.uk