Nvidia Acquisition Of ARM Faces Competition Probe

UK competition regulator the CMA, launches investigation into the acquisition of British silicon designer ARM Holdings by Nvidia

The UK competition regulator, the Competition and Markets Authority (CMA), has announced it will investigation Nvidia’s acquisition of ARM Holdings.

It was in September 2020 when it was revealed that UK-based chip designer ARM, whose designs power most of the world’s smartphones, was to be sold to Nvidia for a hefty $40 billion (£31.2bn).

That acquisition was controversial and opposed by two of ARM co-founders, Tudor Brown and Hermann Hauser who previously said the company should not be sold to a semiconductor firm, but should remain a neutral supplier to the industry.

ARM’s campus in Cambridge

CMA investigation

The sale comes four years after SoftBank had acquired ARM for $32bn, and it prompted political concern in the UK, with politicians urging the government to step in to ensure that ARM remained headquartered in Cambridge.

Into this, four months after the deal was first announced, the UK competition regulator, the CMA announced that it would investigate the deal.

It invited “interested third parties to comment on the impact that the takeover could have on competition in the UK”, ahead of the CMA’s formal investigation starting later this year.

The CMA said it is likely to consider whether, following the takeover, ARM has an incentive to withdraw, raise prices or reduce the quality of its IP licensing services to NVIDIA’s rivals.

“The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives,” noted Andrea Coscelli, chief executive of the CMA.

“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,” Coscelli added.

The CMA’s remit, by law, is to assess the potential impact of a merger on competition.

It said it cannot consider other potential effects that a merger might have, for example on employment or industrial strategy.

Any national security concerns would be a matter for the UK Government, it said.

Government reaction

The British government has previously said it monitored all acquisitions and would investigate if warranted.

“While proposed acquisitions are primarily a commercial matter for the parties concerned, the government monitors these closely,” a government spokesman said back in September.

“Where we feel a takeover may represent a threat to the UK, the government will not hesitate to investigate the matter further, which could lead to conditions on the deal,” the spokesman added.