Anytime one major company purchases another, governments worldwide investigate the acquisition to determine if it’ll hurt competition. Competition in environments is critical to improving products and prices for consumers. For example, one of the most important deals in recent memory works is Nvidia attempting to get an ARM.
Earlier this month, authorities within the UK announced the deal poses a possible 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 an in-depth investigation into the potential deal-supported competition concerns. CMA fears if the acquisition is allowed to travel through, it could harm the competitiveness of Nvidia’s rivals by restricting access to ARM IP. Many competitors to Nvidia believe ARM semiconductors for products that compete against Nvidia’s products.
The CMA fears any loss of competition would restrict innovation across multiple markets, starting from data centers and gaming to self-driving cars and beyond. The agency also fears a scarcity of competition would increase prices or possibly lower product quality. In its proposed purchase, Nvidia did offer a possible solution to the concerns, but CMA says behavioral remedies of this sort 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 undergo 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.