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UK Regulators Fear Inflated Prices From Nvidia-Arm Acquisition, Launch Deeper Probe

Nvidia + Arm
(Image credit: Nvidia)

The U.K.'s Competition and Market Authority (CMA) today announced an in-depth Phaser 2 probe of Nvidia's planned purchase of Arm. The organization is concerned that Nvidia will have the ability and incentive to limit access of its rivals to some of Arm's technologies, which would grant it significant advantages and lead to a substantial lessening of competition (SLC). 

"We are 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," said Andrea Coscelli, chief executive of the CMA. "This could end up with consumers missing out on new products or prices going up." 

In a bid to sweeten the proposed takeover to UK authorities, Nvidia proposed to pour in at least $100 million in the country's most powerful supercomputer and additional investments in Arm. Yet, the CMA said that 'this type of remedy would not alleviate its concerns,' which is why it proceeds to an in-depth Phase 2 investigation. 

CMA's in-depth Phase 2 investigation is going to take up to 24 weeks and is extendable by up to 8 weeks. If everything goes as planned, the CMA will publish its resolution on the transaction by late February. If it extends the investigation, the CMA will only make its conclusion by late April.

At Phase 2, a CMA panel conducts an detailed examination to evaluate if a merger is projected to result in an SLC. If an SLC is probable, the CMA makes decisions about the remedies required. They may include barring the transaction or demanding the sale of parts of the business to avoid SLC. After the final Phase 2 report is published, the CMA has a legal deadline of 12 weeks, extendable by up to 6 weeks, to make an order or accept undertakings to give effect to its Phase 2 remedies.  

Should the CMA not prohibit the transaction or demand any remedies, Nvidia's acquisition of Arm could be cleared in late February or late April in the UK. Nvidia planned to complete its acquisition of Arm by March 2022, with an optional extension to September 2022.  

UK's CMA began to question Nvidia's proposed acquisition of Arm on national security grounds in April, when it launched the Phase 1 investigation of the deal. The Phase 2 probe is the next and final CMA review.  

Earlier this week Nvidia Jensen Huang CEO admitted in an interview with the Financial Times that the acquisition might take longer than expected. Nvidia only submitted the necessary papers to Chinese anti-monopoly regulators in June, and they will take up to 18 months to process. The company won't even submit the required documents to the European Commission (EC) until September. After, it will take the EC will 6 months or longer to review the deal. 

Meanwhile, some sources reportedly close to Arm told The Telegraph earlier this year that if delays and rival obstacles turn out to be undefeatable, an IPO remains an option for Arm.