Investigation Of Nvidia’s $40bn Acquisition Of Arm Initiated By UK Watchdog

The $40bn acquisition of the United Kingdom based chip designer Arm by the American chipmaker Nvidia is being investigated by the competition watchdog of Britain.

A call for submission of views on the contentious deal by interested parties before the launch of a formal investigation later this year has been given by the Competition and Markets Authority (CMA).

With 6,500 staff including 3,000 in the UK, Arm Holdings is a leader in the designing of chips for smartphones, computers and tablets globally. In September this year, its plan of acquiring the British tech group from Japan’s SoftBank was announced by the California-based Nvidia which is a specialist in manufacturing of graphics chip.

In 2016, with the fall in the value of the pound after the Brexit vote, Arm was acquired by Japan’s SoftBank for $32bn. Primarily based in Cambridge, the operations of Arm span a number of UK towns and cities including Manchester, Belfast and Warwick.

At the time of the announcement of the deal with Nvidia, Arm’s chief executive Simon Segars had conceded that the time that would be required to get approvals for the deal from regulators all over the world could take as long as 18 months.

“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,” said the chief executive of the CMA, Andrea Coscelli, On Wednesday.

The possible effect of the deal on competition in the UK would be examined by it, the CMA said, and added that it would also look into whether Arm had an “incentive to withdraw, raise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals”.

The CMA has the powers to block the takeover if the regulator finds through the investigation that the deal breaches UK competition rules.

Opposition to the acquisition was expressed in October by Hermann Hauser, the co-founder of Arm, in a letter written to the House of Commons foreign affairs committee in which he argued that the combined business of the two companies would create the next US tech monopoly just as the likes of Google and Facebook if the deal was allowed to proceed.

He also argued that Arm’s “even-handed” model of business would be destroyed by the approval of the deal because Nvidia is one of more than 500 users of Arm’s designs globally – which include the likes of Apple, Samsung and Qualcomm. The deal will make Nvidia the owner of the Cambridge-based business and that would ultimately kill the world-leading British tech company.

The deal would be “an absolute disaster for Cambridge, the UK and Europe”, Hauser also told the BBC last year. he had added in that interview that there would be job losses because Nvidia would inevitably decide to relocate Arm to the United States.

(Adapted from TheGuardian.com)

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