I believe it is named after the British telecommunications company who sponsor it (or certainly sponsored it for the first few years).
The only award that I know about named after Freddie Mercury or Queen is the special BRIT award which has been given to British musicans/singers/music organisations etc. that have done something worthy for charity but it has only been presented on a couple of occasions.
In 1999 it was given to Jubilee 2000
In 1998 it was given to Elton John
In 1996 it was given to The Help Album for War Child
I think those where the only years it has been awarded to date.
The Mercury Prize is now sponsored by the the comapny Nationwide but it still keeps the Mercury connection in that it is now called " The Nationwide Mercury Prize.
I believe the original Mercury company no longer exists.
The strange thing is the Help Album for War Child which won the Freddie Mercury BRIT Award in 1996 was also nominated for the Mercury Prize in the same year. Lost out to Pulps album "A Different Class" though.
More about the Mercury Prize here: link
And the BRITS here : link
Ah Ok. I thought since the award began in 1992, perhaps Freddie Mercury would've been the inspiration.
That said, I think they should have a Freddie Mercury Award for best singer or something.
They did, there even is an ancient drawing in a cave somewhere where a person colored in yellow is raising his fist in the air, and with his other hand he is holding a stick holding it to his mouth