ARM Nvidia deal goes to full investigation in the UK

August 20, 2021 // By Nick Flaherty
ARM Nvidia deal goes to full investigation in the UK
The reassurances offered by Nvidia in the $40bn takeover of ARM are not sufficient, says the competition and Mergers Authority in a blow to the deal

The UK’s competition authority is to examine Nvidia’s takeover of chip designer ARM in detail following an initial investigation. The move is a blow to the $40bn deal, one of the largest ever in the semiconductor industry, and likely to be mirrored by European, US and Chinese regulators.

The UK Competition and Mergers Authority (CMA) says it is concerned that the merged business would have the ability and incentive to harm the competitiveness of Nvidia’s rivals by restricting access to ARM’s intellectual property (IP). This loss of competition could stifle innovation across a number of markets, including data centres, gaming, the internet of things and self-driving cars, it says.

Nvidia offered reassurances that this would not happen when the deal was announced, but the CMA found that these would not alleviate its concerns, nor would selling off part of ARM.

The CMA said it had received a substantial number of detailed and reasoned submissions from customers and competitors raising concerns around the supply of CPUs, interconnect products, GPUs, and SoCs across several global markets, spanning the datacentre, internet-of-things, automotive and gaming console applications.

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The breadth and technical nature of the offer meant that the CMA does not believe any form of behavioural remedy would address the competition concerns. Sometimes selling part of the business is a requirement to meet competition worries, but the CMA also does not believe any partial divestment of ARM’s IP business(es) would be sufficiently clear-cut and comprehensive enough.

“We’re concerned that Nvidia controlling ARM could create real problems for Nvidia’s rivals by limiting their access to key technologies, and ultimately stifling innovation across a number of important and growing markets. This could end up with consumers missing out on new products, or prices going up,” said Andrea Coscelli, chief executive of the CMA.

“The chip technology industry is worth billions and is vital to products that businesses and consumers rely on every day. This includes the critical data processing and datacentre technology that supports digital businesses across the economy, and the future development of artificial intelligence technologies that will be important to growth industries like robotics and self-driving cars.”

In April a public interest intervention notice was issued regarding the merger on the ground of national security. The UK government now has to decide whether the merger should be referred for an in-depth Phase 2 investigation on both competition and national security grounds, or if it should be passed back to the CMA to investigate on competition grounds only. The timing of this decision will be decided by the Secretary of State for the Department for Digital, Culture, Media and Sport (DCMS). This will almost certainly push the deal beyond the expected 18 month timeframe.

www.gov.ukarm.nvidia.com

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