UK to investigate Nvidia ARM acquisition in depth

The UK’s Digital Secretary wants the Competition and Markets Authority to launch a deeper investigation into Nvidia’s acquisition of Arm. In addition to reducing competition, which the CMA previously warned, the minister fears for national security.

Minister Nadine Dorries wants the CMA to now start a so-called Phase Two investigation into the acquisition of Arm, after the CMA previously completed a Phase One investigation. The CMA already recommended a more in-depth investigation at the time and said at the earlier stage that the acquisition could potentially lead to “substantially less” competition.

The CMA saw that there were four markets where there could potentially be much less competition, namely data center, IoT, automotive and gaming. After all, Arm licenses third parties to make products; the CMA fears that after the acquisition, Arm would prefer Nvidia and sell licenses at higher prices to other companies, or discontinue those sales.

However, Dorries believes the takeover could also have adverse consequences for British national security. She thinks that by reducing competition, there will also be less emphasis on the safety of a product. The lack of competition would mean that, for example, Arm would have to innovate less in this area. In addition, as a result of the acquisition, Arm could fall under the laws of other countries, whereby Arm’s intellectual property could be less safe, Dorries thinks.

The British watchdog will therefore now conduct further investigations into the acquisition, which will look at the consequences for competition and national security. The CMA has 24 weeks for this examination, which can be extended by 8 weeks. The minister or the CMA can then take steps to resolve any concerns.

Nvidia announced in September 2020 that it plans to acquire Arm for $40 billion from SoftBank. Since then, several competition authorities have launched investigations. The European Commission is also investigating the takeover and recently said it would also investigate the takeover more extensively.