The three-way deal aims to strengthen Europe’s satellite industry as Elon Musk’s Starlink sets the pace in low Earth orbit. It could also leave the EU with fewer suppliers for its own secure communications network.

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BRUSSELS — The EU faces a strategic dilemma over a proposed space merger that has been hailed as a potential European “champion” by Ursula von der Leyen, but could raise costs as the bloc builds out its own secure satellite communications.

The deal between Airbus, Leonardo and Thales would combine their satellite and space systems operations into a business with €6.5 billion in annual sales and 25,000 employees across Europe.

The EU’s top satellite suppliers say that by joining forces they’ll be able to boost the bloc’s strategic autonomy in space. The three-way alliance, code-named “Bromo,” would not compete directly with Elon Musk’s Starlink, but aims to build Europe’s position in the same fast-growing low Earth orbit satellite market.

The merger complements the EU’s broader push for strategic autonomy in space based on secure communications for governments and emergency services. The importance of that effort was underscored last week when Ukraine said Starlink’s military-grade service, Starshield, had been throttled at Musk’s initiative, hindering Ukrainian drone operators from intercepting incoming Russian air strikes.

Von der Leyen, the European Commission president, has thrown her weight behind the deal. “These are the types of industrial champions we need if Europe is to lead in the space economy of tomorrow,” she told an international space summit in Paris last month.

But the EU’s antitrust arm, which needs to greenlight the deal, isn’t convinced.

The companies have been talking informally with the Commission’s competition department for almost two years, contending that the deal won’t harm customers by raising prices or stifling supply.

In the Commission’s merger process, companies typically want to get on the same page with officials before the review clock starts ticking. That appraisal can last from 25 days to several months, and can result in deals being cleared subject to conditions, or even blocked outright.

That formal review process has yet to begin. The satellite makers are discussing divesting plants across Europe to address the concerns of EU officials, but an agreement isn’t yet visible, two people familiar with the matter told POLITICO. They were granted anonymity to discuss the confidential process.

“We are further away than we thought,” one of the people said, adding that a formal review may not kick off before early 2027.

The deal would reduce the number of major European satellite providers to two, raising obvious concerns over market concentration for the Commission’s trustbusters.

These misgivings are especially relevant to IRIS², a €15.6 billion secure communications network the Commission is overseeing that would feature 348 low and medium Earth orbit satellites. First launches are planned from 2029.

The proposed merger would bring together companies that have already been assigned major roles in the project: Airbus is building satellite platforms, while Thales Alenia Space — jointly owned by Thales and Leonardo — is supplying communications payloads.

That overlap sharpens the dilemma for Brussels. The merger could strengthen the industrial base needed to deliver a flagship EU space program, but would also raise questions about the Commission’s bargaining power and future choice of suppliers.

The Commission’s defense department is involved in the talks and has raised concerns, as any big customer would in a merger, the people said. Defense officials are torn between their desire for a bigger European player, and the fact that could leave them with fewer suppliers and higher prices.

On the face of it, the defense department is taking a collaborative approach. “DG DEFIS is not against Bromo. Its stated industrial policy objective is the emergence of European champions. The assessment of the transaction is for other Commission services,” an EU official told POLITICO.

The Commission declined to comment on the proceedings.

The European Space Agency, another customer, says it is keeping an open mind on the deal. Its impact “is, of course, important,” Director General Josef Aschbacher told journalists in Brussels recently as he detailed plans “to establish a very strong competitive European ecosystem of industry.”

German rival OHB, meanwhile, has said the combination would create monopolies and could harm smaller players. It is threatening legal action if the Commission clears the deal without safeguards.

OHB has also expressed doubts that the deal would empower Bromo to take on rivals in the U.S. and China. SpaceX, which operates Starlink, has reported third quarter revenues of $14.6 billion and has a market capitalization of $2 trillion after its recent initial public offering.

Von der Leyen’s enthusiasm is shared by French and Italian leaders Emmanuel Macron and Giorgia Meloni, who have endorsed Project Bromo as an emblem of renewed industrial cooperation.

But the endeavor has raised hackles in the competition community and has again highlighted how von der Leyen is pushing an ambitious industrial agenda that would effectively downgrade enforcement of the EU’s competition rulebook, which is overseen by her No. 2, Teresa Ribera.

Ribera said following von der Leyen’s remarks that the Airbus deal wouldn’t win preferential treatment, citing pushback from labor unions and suppliers who have warned about its impact on jobs and competition.

Despite von der Leyen’s “champions” narrative, the European satellite industry views the deal as a matter of survival.

Airbus, which recorded significant charges in its space business in 2023 and 2024, announced plans last year to cut up to 2,043 jobs across its defense and space division. The company’s fortunes improved in 2025, with revenues rising 11% to €13.4 billion and core earnings turning positive.

“We do not comment on active regulatory processes or market speculation. The Bromo project is proceeding as planned,” an Airbus spokesperson said.

Regional officials in southern France, where Airbus is headquartered, recently endorsed the merger. An estimated 15,000 space sector jobs are based in Toulouse.

A representative of a smaller industry player suggested the deal aimed to stabilize Airbus’ order book and preserve jobs in France. “This is really about saving Toulouse,” they said.

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