Phase
II review of NVIDIA/ Arm deal on national security grounds
The
Secretary of State for Digital, Culture, Media and Sport has instructed the Competition
and Markets Authority (CMA) to carry out an in-depth investigation of the
proposed acquisition of Arm by NVIDIA on competition and national security
grounds.
The
Secretary of State has powers under the Enterprise Act 2002 to intervene in
certain mergers on public interest grounds.
NVIDIA
develops and supplies processor products.
Arm licenses intellectual property for processing units, in particular
to semiconductor chipmakers and Systems-on-Chip developers.
In
its Phase I investigation the CMA identified that the transaction raises the
possibility of a substantial lessening of competition across four key markets -
data centres, Internet of Things (IoT), the automotive sector and gaming
applications.
The
CMA is leading a Phase II investigation covering both competition and national
security grounds.
The
CMA has 24 weeks (subject to a possible eight-weeks extension) to conduct this
investigation.
Separately,
this week the UK government has published guidance clarifying what types of transactions
will be subject to new national security provisions. These require that the government must be
informed about acquisitions of companies that do business in the UK within 17
sectors deemed to be of “national importance”, including artificial
intelligence, data infrastructure and defence.
In
October 2021 the European Commission launched a Phase II merger investigation over
similar (competition) concerns that the merged entity would have an incentive
to restrict its rivals from accessing Arm’s technology.
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