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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.

  • InvalidError
    Fear of inflated prices? I'm pretty much certain this was the whole point and a practically foregone conclusion. Companies rarely buy or merge with another to squeeze less money out of their customers. Especially not in today's already heavily vertically integrated markets where acquisitions and mergers rarely serve any purpose other than eliminating customer choices and jacking up prices.
    Reply
  • thisisaname
    If they do that they significantly destroy the value of the purchase.

    Push the price up to much and you just incentivize the customers to invest in RISC-V
    Reply
  • artk2219
    I'd been hoping this would not go through since news of it initially broke. Thats a bad partnership, Nvidia has a habit of fleecing anyone they can, whenever they can, and not exactly being the friendliest with the open source community, and burying or making proprietary tech from acquired companies (Physx, sli). On the plus as mentioned by thisisaname, it would likely speed up the push towards RISC-V being the dominant architecture most devices are built on in the future.
    Reply
  • spongiemaster
    Of course prices are going to go up. ARM has been losing money in recent years. Nvidia isn't going to pay $40 billion for a company and let it continue losing money. Not sure how that is within a gov't's jurisdiction to only approve a merger if the acquisition prices can't be raised forcing it to continue bleeding money. Who's going to want to buy ARM with those conditions?
    Reply
  • spongiemaster
    artk2219 said:
    Nvidia has a habit of fleecing anyone they can, whenever they can, and not exactly being the friendliest with the open source community, and burying or making proprietary tech from acquired companies (Physx, sli).

    Physx is open source and SLI was proprietary to 3dfx before NVidia acquired it. By the time Nvidia acquired 3dfx, their method of SLI was useless for gaming and there is no indication Nvidia ever used it.
    Reply
  • InvalidError
    thisisaname said:
    Push the price up to much and you just incentivize the customers to invest in RISC-V
    People have been saying that ARM will take over x86 for over a decade. Although ARM is finding its way into more embedded, mobile computing and special-purpose applications, x86 is still the uncontested king of general-purpose computing with no end in sight.

    Even if Nvidia decided to be absolute jerks with ARM, it would likely take 10+ years for companies to completely migrate away from it.

    In all likelihood, most major ARM licensees have long-term licenses that Nvidia wouldn't be able to change much any time soon precisely to shield themselves from this sort of BS - you don't want to invest billions of dollars into an ISA and related ecosystem when the provider can unilaterally pull the carpet from under you at the drop of a hat.
    Reply
  • TheOtherOne
    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.

    this is CLEARLY under over the table bribe offer and yet it's Ok. for multi billion dollar corps. to do this. But when an average person tries, they are charged with bribery and might even be put in jail. :ptdr:
    Reply
  • dalek1234
    Admin said:
    ...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...

    That's an indirect bribe
    Reply
  • dalek1234
    TheOtherOne said:
    this is CLEARLY under over the table bribe offer and yet it's Ok. for multi billion dollar corps. to do this. But when an average person tries, they are charged with bribery and might even be put in jail. :ptdr:

    I haven't read your comment before posing mine, but exactly. It's a bribe and that Kowk $ucker Jensen Huang will get away with it.
    Reply