Regulators probe £29bn takeover of Arm
THE American takeover of British chip designer Arm was dealt another blow yesterday as the UK competition watchdog warned it could stifle innovation.
Nvidia is trying to buy the Cambridge firm for £29bn from Japan’s Softbank, which has owned it since 2016. But the Competition and Markets Authority (CMA) is calling for the deal to be subjected to a full-blown investigation over concerns it could lead to less competition and higher prices.
If the takeover is approved, the CMA said Nvidia would have ‘the ability and incentive’ to harm rivals by throttling their access to Arm’s technology.
Arm currently licenses its pioneering microchip designs to manufacturers around the globe, a model that has seen it dubbed ‘the Switzerland of semiconductors’. Nvidia has offered to provide assurances that it would continue to allow this but those were dismissed by the CMA.
Andrea Coscelli, the regulator’s chief executive, said: ‘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.
‘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 selfdriving cars.’
The CMA’s findings emerged from a ‘phase one’ investigation of the takeover, with the regulator now recommending that a more in-depth, ‘phase two’ probe should follow.
It is up to Oliver Dowden, the Culture Secretary, to decide whether that will proceed. A spokesman for the Department for Digital, Culture, Media and Sport said he would make a decision ‘in due course’.
A phase two investigation is likely to add at least another six to eight months to the deal process, one City source said.
That would bring the situation perilously close to Nvidia’s cut-off point in September, when it has vowed to walk away if no deal is reached. The firm has already had to scrap its original target of sealing the takeover by March next year.
In China, where a battle for control over Arm’s local subsidiary has complicated matters, regulators have still not even started to examine Nvidia’s submissions.
At the same time, the UK Government is considering the national security implications of the deal. The CMA has provided ministers with a summary of representations from third parties on that issue.
Nvidia said: ‘We look forward to the opportunity to address the CMA’s initial views and resolve any concerns the Government may have. We remain confident that this transaction will be beneficial to Arm, its licensees, competition and the UK.’