: Nvidia’s pending Arm merger faces heightened regulatory scrutiny as competitive concerns mount
Nvidia Corp.’s deal for Arm Ltd. faces additional regulatory scrutiny after its was referred for additional investigation in the U.K.
Digital Secretary Nadine Dorries asked the U.K’s Competition and Markets Authority (CMA) to conduct an “in-depth” Phase Two investigation of the deal, according to a press release issued on the U.K. government’s website Tuesday. The CMA has 24 weeks to complete its investigation, which is looking into concerns about the proposed merger on “competition and national security grounds.”
The CMA already conducted a Phase One investigation, which determined that the proposed deal “raises the possibility of a ‘substantial lessening of competition across four key markets,’ — data centres, Internet of Things, the automotive sector and gaming applications,” per the release.
announced in September 2020 that it planned to acquire Arm from Softbank Corp.
in a deal valued at $40 billion. At the time, analysts thought the deal had the potential to expand Nvidia’s dominance, though they predicted that the merger would face regulatory pushback in various markets.
Regulators in the E.U. also launched a recent in-depth investigation into the pending combination.
“Whilst Arm and Nvidia do not directly compete, Arm’s IP is an important input in products competing with those of Nvidia, for example in [data centers], automotive and in Internet of Things,” European Commission Executive Vice-President Margrethe Vestager said in a late-October release announcing the opening of the E.U.’s in-depth investigation. “Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, with distortive effects in many markets where semiconductors are used.”
Nvidia shares are off 0.5% in Tuesday’s session, but they’ve been on a hot streak recently, rising 37% over the past month as the S&P 500
has gained 5%. The company is due to report earnings Wednesday afternoon.