Watchdog to investigate £30bn Arm takeover

Sale to US could now be blocked

THE American takeover of British chip maker Arm is facing yet another hurdle after the competition watchdog launched a probe into the £30bn deal.

US giant Nvidia is trying to buy Arm from Japanese owner Softbank, but its move faces growing scrutiny around the world.

In the latest setback, the Competition and Markets Authority (CMA) said that it was set to investigate the takeover amid concerns it could lead to price hikes and make markets less competitive.

Cambridge-based Arm’s chip designs are used in a plethora of digital devices, including most smartphones globally, making them a crucial piece of many supply chains.

The CMA’s intervention comes after Arm’s founders and other critics claimed that Nvidia could seek to strangle the supply of its cutting- edge designs to rivals such as Apple and Qualcomm, reversing the company’s current ‘ Switzerland’ approach of licensing them widely.

It ramps up scrutiny of the deal at a time when Nvidia faces trouble in China, where Arm’s local division has effectively gone rogue and is urging Beijing to block the takeover.

Concerns have also been raised about the security of jobs and whether some buyers could be locked out of buying the designs in some scenarios, due to US defence laws.

A probe by the CMA is only in the early stages and the watchdog has yet to decide if it will do an in-depth examination.

But its move yesterday starts a process that could eventually result in the deal being blocked altogether, or force Nvidia to give certain guarantees.

And even if the CMA grants approval, British ministers are mulling over whether to intervene in the takeover on public interest grounds. Andrea Coscelli, chief executive of the CMA, said: ‘The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives.

‘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.’

Nvidia unveiled its bid for Arm in September and has always insisted it does not threaten jobs or competition.

It claims that Arm will still be able to sell its chip designs widely and has vowed to open new facilities in Cambridge.

However, the company is still seen as one of the crown jewels in the UK technology sector and ministers, including Prime Minister Boris Johnson, are keeping a close eye on the deal.

Former prime minister Theresa May was criticised for backing the £24bn sale of Arm to Softbank in 2016, with critics claiming it undermined the Government’s ambition to develop an industrial policy and protect strategically important sectors.

Softbank later sold Arm’s Chinese division for £580m to local investors in a controversial deal that some claimed undervalued the business.

The takeover has since spectacularly backfired, after Arm China boss Allen Wu refused to leave after being sacked by Arm’s board and instead seized control of the division. He remains in control and could stand in the way of Nvidia’s takeover.

Officials in Beijing are also said to be wary of the deal, fearing that if Arm falls into American ownership then Chinese firms could be blocked from buying its chip designs for security reasons. A spokesman for Nvidia pointed to an earlier announcement saying that the company fully expected regulatory scrutiny of the deal.

He added: ‘As we have said, we believe the approval process will take about 18 months.

‘ The regulatory process is confidential and we won’t be providing comment on milestones along the way.’