NVIDIA's Arm acquisition 'raises serious competition concerns' says UK government

Gandalf_The_Grey

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The UK government is concerned that NVIDIA purchasing Arm will stifle competition and hurt customers.

What you need to know
  • The UK's Competition and Markets Authority determined that an in-depth investigation is needed regarding NVIDIA's purchase of Arm.
  • The CMA is concerned that the deal could result in NVIDIA's rivals not having access to Arm's intellectual property.
  • The chief executive of the CMA says the acquisition could stifle innovation across "important and growing markets."
NVIDIA's proposed purchase of Arm is being slowed by yet another regulatory body. The UK's Competition and Markets Authority (CMA) recommends an "in-depth Phase 2 investigation on competition grounds."

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

Late last week, NVIDIA CEO Jensen Huang said that NVIDIA's discussions with regulators about the Arm deal "are taking longer than initially thought," which is "pushing out the timetable." Hensen's comments came before the UK's CMA shared its executive summary and its press release about the deal.

Several complaints from customers and competitors encouraged the CMA to look into the potential purchase of Arm further:

1.6. The CMA received a substantial number of detailed and reasoned submissions from customers and competitors raising concerns in numerous markets. After careful examination, the CMA found significant competition concerns associated with the merged business' ability and incentive to harm the competitiveness of NVIDIA's rivals (that is, to 'foreclose') by restricting access to Arm's CPU IP and impairing interoperability between related products, so as to benefit NVIDIA's downstream activities and increase its profits.
The CMA did not list any specific companies that issued a complaint. Separately from regulatory efforts in the UK, Google, Microsoft, and Qualcomm have all reportedly complained to U.S. antitrust regulators regarding NVIDIA's proposed purchase of Arm.

The UK government has also looked into the deal over national security implications. EU regulators and the Chinese government have also slowed down the acquisition for separate reasons.

After looking into the situation, the CMA found several competition concerns:

1.7. The CMA found significant competition concerns as a result of the effect of such foreclosure in the supply of CPUs, interconnect products, GPUs, and SoCs across several global markets, spanning the datacentre, internet-of-things, automotive and gaming console applications.
1.8. The CMA found that the foreclosure strategies identified would reinforce each other and would, individually and cumulatively, lead to a realistic prospect of a substantial lessening of competition (SLC), and consequently to a stifling of innovation, and more expensive or lower quality products.
The CMA explains that NVIDIA offered a "set of behavioural remedies seeking to address the CMA's concerns," but the measures don't appear to ease concerns.

"The CMA does not believe any form of behavioural remedy would address the competition concerns identified to the phase 1 clear-cut standard," said the CMA in its executive summary.

The UK Secretary of State (SoS) will now decide if a Phase 2 investigation is needed on both competition and national security grounds or if the acquisition can be looked at solely by the CMA on competition grounds.
 

upnorth

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Brussels is set to launch a formal competition probe early next month into Nvidia’s planned $54 billion takeover of British chip designer Arm, after months of informal discussions between regulators and the US chip company.

The investigation is likely to begin after Nvidia officially notifies the European Commission of its plan to acquire Arm, with the US chipmaker planning to make its submission in the week starting September 6, according to two people with direct knowledge of the process. They added that the date might yet change, however.
 
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