Graphics chip vendor Nvidia Corp. agreed to buy intellectual property licensor ARM from Japan’s SoftBank Group in summer 2020, subject to regulatory approval (see ARM sale to Nvidia agreed at $40 billion). If successfully concluded, the deal would be the biggest M&A in the history of the semiconductor sector.
The CMA said interested third parties have until January 27 2021 to provide any initial views on the impact the proposed deal could have on competition in the UK. Further opportunities to submit views are expected when the CMA begins its investigation, but there is no set date for that at present.
The CMA’s remit under the Enterprise Act 2002 is only on whether the merger would “substantially lessen” competition within any markets for goods and services in the UK. The CMA does not consider a merger’s impact on employment or industrial strategy.
As a separate consideration, the UK government could ban the takeover on national security grounds, but as ARM is owned by Japan’s SoftBank Group, as a result of an acquisition allowed in 2016, that seems unlikely.
The CMA will likely look at whether, after a takeover, ARM has any incentive to raise prices, lower quality or withdraw IP licensing to Nvidia’s rivals and whether that would ultimately hit UK consumers in such areas as smartphone and other mobile devices, computers, games consoles and vehicle electronics.
“We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products,” said Andrea Coscelli, chief executive of the CMA, in a statement.
In the global semiconductor industry, the UK’s position on the deal is not as significant as that of the authorities in the United States and China. With Nvidia as a US-domiciled company there is less reason for the US to object, but with US-China trade and geo-political tension yet to be dialled down, China may yet seek to leverage its position in relation to a number of proposed deals (see China likely to block Nvidia-ARM deal, says ex-Lenovo exec and Opinion: Nvidia’s bad deal is not yet done).
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