Britain’s competition watchdog has kicked off a probe into Nvidia’s blockbuster takeover of Arm, citing concerns the deal could lead to higher prices for consumers and hamper rivals.
The Competition and Markets Authority said it would be launching a formal investigation into the planned $40bn (£30bn) takeover later this year, and was inviting third parties to comment on the deal.
As part of the probe, the CMA will be analysing whether the takeover will affect competition in the UK, specifically whether Cambridge-based Arm would have an incentive to withdraw, raise prices or reduce the quality of its licensing services to Nvidia’s rivals.
Arm’s microchip designs are licenced to hundreds of companies including Samsung and Apple, with those designs used in billions of smartphones and connected cars, earning it the title of the "Switzerland of the chip industry" – a reference to its neutrality.
However, many of Arm’s customers have warned this could be jeopardised by a takeover by US company Nvidia, and could hand their rival Nvidia an advantage.
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.”
The launch of the latest investigation comes weeks after US regulators kicked off their own probe, requiring the companies to hand over detailed information on the deal.
Nvidia has previously suggested regulatory scrutiny was expected and that the deal could be held up until 2022. It was announced last September.
Boss Jensen Huang has maintained there will be no change to Arm’s open business model after the takeover, and has said Nvidia would be open to legally binding commitments to secure jobs in the UK.
The latest probe by the CMA will only examine competition concerns, and not the potential impact on national security – which could involve the Government making a separate intervention.
It marks the latest show of Britain’s regulators cracking down takeovers by major tech firms of UK companies, following comments by the CMA last month that it would be ramping up scrutiny of deals in the sector.
The regulator has suggested a new digital markets unit, to be launched in April, should be given fresh powers to block so-called "killer acquisitions", where promising British firms are snapped up by larger players.
Arm was already taken over by Japanese business Softbank for $32bn in 2016, and has since been touted as one of the British champions which could have been a world technology leader.
Co-founder Hermann Hauser had said that proposed sale marked a "sad day for me and for technology in Britain". He has since been critical of the latest takeover by Nvidia, saying it would be an "absolute disaster" for Cambridge.
He has urged the Government to help "make Arm a British company again" by intervening and helping it to float in London instead of a sale.
Both Arm and Nvidia declined to comment.