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Nvidia-ARM deal in danger as CMA raises ‘serious’ competition concerns

The regulator is worried the joint entity will restrict access of Nvidia’s rivals to Arm’s IP

The prospective $40 billion merger between the US chipmaking giant Nvidia and Arm is under threat after the UK’s markets regulator flagged “serious” antitrust concerns.

The Competition and Markets Authority (CMA) is concerned the merged business would have the capacity, and incentive, to restrict access to Arm’s intellectual property (IP). This is currently used by companies that rival Nvidia to produce semiconductor chips, in competition with the US giant. 

This loss of competition could disrupt innovation across several markets, including data centres and the internet of things (IoT), the agency’s in-depth review has concluded. This might result in more expensive or lower quality products for businesses.

“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,” said CMA chief executive, Andrea Coscelli. “This could end up with consumers missing out on new products, or prices going up.

“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 data centre 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.”

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Although Nvidia announced its proposed takeover of Arm in September last year, the deal hadn’t been finalised subject to the regulatory process. The CMA then launched its investigation into the deal in January 2021.

In April 2021, the secretary of state of digital, culture, media and sport (DCMS), Oliver Dowden, also stepped in to issue a public interest intervention notice in relation to the merger, on the grounds of national security.

Dowden will now decide whether the merger should be referred for an in-depth phase two investigation on both national security and competition grounds only. 

Although Nvidia has offered a behavioural remedy, which will regulate the ongoing behaviour of its operations, the CMA has found that even this won’t alleviate its concerns. The CMA has, therefore, recommended in its report that the merger should be progressed to an in-depth phase two investigation. 

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