CMA to investigate Nvidia's Arm takeover

The regulator is seeking comments on the impact of the deal on competition in the UK

The UK's Competition and Markets Authority (CMA) announced on Wednesday that it is preparing to launch an investigation into Nvidia's $40 billion (£29.5 billion) takeover of British computer chip designer Arm Holdings.

The regulator said that it was inviting views from other companies and organisations on the impact of the deal on competition in the UK. It plans to launch a formal investigation later this year.

'The CMA will look at the deal's possible effect on competition in the UK. The CMA 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 regulator said.

'Further opportunities to submit views will be provided once the CMA begins its formal Phase 1 investigation in due course.'

The CMA usually takes up to 40 days to complete the first phase of an investigation, following which it decides whether to move to a longer in-depth review of a proposed deal.

Nvidia, the largest US chip firm by market capitalisation, announced in September that it has entered an agreement with Japan's SoftBank Group to buy Arm for $40 billion.

Following the takeover, Arm will operate as a division of Nvidia. The US firm has promised to provide Arm more support for its R&D efforts, as well as access to its entire suite of products.

Nvidia says the acquisition will create 'the premier computing company for the age of artificial intelligence,' supporting developments in robotics, life sciences, healthcare, autonomous driving and other fields.

Arm's chip designs are widely used by various smartphone makers, as well as in data centres, laptops and IoT devices.

Because Nvidia is a licensee of Arm chips, the deal has triggered concerns among other licensees, who are worried about the potential impact of the deal on Arm's long-standing position as a neutral supplier.

More than 2,000 business leaders signed an open letter last year, urging Boris Johnson to block the merger.

The Labour Party has called on the government to intervene in the takeover, while two of Arm's co-founders have also raised issues about the proposed buyout deal.

Nvidia said that Arm will @continue to operate its open-licensing model, while maintaining its global customer neutrality.'

In an interview with Reuters, Rene Haas, President of Arm's IP Products Group, said the British company will take all necessary measures following the completion of the deal to ensure that the Nvidia ownership does not compromise Arm's relationship with its customers.

Haas stated that Arm will keep 'firewalls' in place to prevent Nvidia from accessing confidential information about its customers, or getting early access to its products.

Hermann Hauser, Arm co-founder, wrote to the Prime Minister in September, stating that he was "extremely concerned" about the impact on Arm's business model, the future of the country's economic sovereignty, and British jobs.

Hauser also told the BBC that the deal would be "an absolute disaster for Cambridge, the UK and Europe", and that the American chip maker would eventually relocate Arm to the US.