Concessions offered last week by Nvidia have reportedly failed to offset an extended antitrust investigation by European Union officials
The European Union is expected to begin an extended investigation of Nvidia’s $54 billion purchase of the UK’s chip designer ARM Holdings.
Reuters, citing three people familiar with the matter, reported that the undisclosed concessions offered last week by Nvidia failed to address EU competition concerns.
However it should be noted that the UK’s Competition and Markets Authority (CMA) watchdog, and indeed the British government – are already leading reviews of the deal for the British company.
This extended EU investigation, if officially confirmed, will be another setback for Nvidia in its quest to acquire ARM.
This is because the deal is already being closely examined in the UK.
In January 2021 the UK competition regulator, the Competition and Markets Authority (CMA), confirmed it would investigate Nvidia’s acquisition of ARM Holdings.
Then in April, the British government responded to the global pressure about the deal, and issued a ‘public interest intervention notice’ over ARM’s sale, citing national security implications.
And in August it was reported that after the CMA submitted its report to the British government about the matter on 30 July 2021, there are signs the deal may be blocked by the UK on national security grounds.
The European Commission is expected to complete its preliminary review on 27 October, and a four-month investigation into the deal would now follow, the people told Reuters said.
A spokesperson for the Commission reportedly declined to comment.
“The regulatory process is confidential. The transaction will help to transform ARM and boost competition and innovation, including in the UK,” Nvidia reportedly said.
Nvidia reportedly offered “behavioural remedies” to the Commission, the people said, without providing details.
Such remedies usually refer to pledges by companies to take measures aimed at preserving competition.
It is fair to say there is a great deal of concern about the deal, ever since it was announced.
Nvidia’s acquisition of ARM is an unpopular move in some quarters, as ARM designs power 95 percent of the world’s smartphones, and there is concern at ARM’s sale to a single chip supplier could give Nvidia too much leverage in the market.
The acquisition has been opposed by one of ARM founders, Tudor Brown, as well as Hermann Hauser (involved in the development of the first ARM processor when it was part of Acorn).
It should be remembered however that Japan’s SoftBank had acquired ARM for $32bn in 2016, which also prompted political concern in the UK at the time, with politicians urging the government to step in to ensure that ARM remained headquartered in Cambridge.
But years later and some big players in the tech industry are concerned at ARM being acquired by Nvidia.
Indeed, the proposed acquisition is being opposed by firms such as Alphabet, Microsoft, and Qualcomm.
It should be noted that Google, Microsoft and Qualcomm all manufacturer their own inhouse processors, and depend upon ARM chip designs.
But ARM customers Broadcom, MediaTek and Marvell are however supporters of the deal.
And in early July ARM’s CEO, Simon Segars, strongly defended the deal, and said it was the best outcome for the British chip designer, and was a better solution than an IPO.
Besides the UK and EU investigations, the US Federal Trade Commission (FTC) and even China’s State Market Regulatory Administration are said to be investigating the proposed deal.