UK CMA Finds Cause For Concern In Nvidia's Potential Purchase Of ARM

Anytime one major company purchases another, governments worldwide investigate the purchase to determine if it will hurt competition. Competition in all environments is critical to improving products and improving prices for consumers. One of the biggest deals in the works in recent memory is Nvidia attempting to purchase ARM.

Earlier this month, authorities in the UK announced the deal poses a potential hazard to national security. The UK's Competition and Markets Authority (CMA) has found serious competition concerns with the potential purchase of ARM by Nvidia. The report the CMA compiled for the Secretary of State for the Department for Digital, Culture, Media, and Sport (DCMS) has been published.

The report recommends a detailed investigation into the potential deal based on competition concerns. CMA fears if the purchase is allowed to go through, it could harm the competitiveness of Nvidia's rivals by restricting access to ARM IP. Many competitors to Nvidia rely on ARM semiconductors for products that compete against Nvidia's products.

The CMA fears any loss of competition would restrict innovation across multiple markets ranging from data centers and gaming to self-driving cars and beyond. The agency also fears a lack of competition would increase prices or possibly lower product quality. In its proposed purchase, Nvidia did offer a potential solution to the concerns, but CMA says behavioral remedies of this type don't alleviate its concern.

The CMA report asks that the merger be progressed to an in-depth Phase 2 investigation on competitive grounds. While the CMA report recommends that in-depth analysis, it's up to the DCMS Secretary of State to decide if the merger should go through the Phase 2 investigation on competitive or national security grounds. The Secretary of State could pass the investigation back to the CMA for investigation on competitive grounds only.