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The British competition authority will start an investigation into the possible takeover of Arm by Nvidia. The investigation will look, among other things, into whether the acquisition might cause problems in the area of national security.

The investigation will be carried out by the Competition and Markets Authority (CMA) on behalf of the Digital Secretary. By the end of July, the competition authority must issue a report with advice on jurisdiction and competition issues. The report must also contain a summary of any comments the authority receives from third parties on possible security issues, the British government reports. Ultimately, the report should show whether the acquisition causes a substantial reduction in competition in any UK market.

Oliver Dowden

“Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds. As a next step and to help me gather the relevant information, the UK’s independent competition authority will now prepare a report on the implications of the transaction, which will help inform any further decisions”, said Oliver Dowden, the Digital Secretary. “We want to support our thriving UK tech industry and welcome foreign investment, but it is appropriate that we properly consider the national security implications of a transaction like this.”

After completing this first phase of the investigation, Dowden will have the option to approve the transaction, provided it does not create any public interest or competition problems. Alternatively, he can make some requirements for the acquisition or proceed with a second phase to have certain issues investigated further.

Arm under the wings of Nvidia

The investigation follows Nvidia’s announcement that it had reached an agreement with Arm to acquire the chip designer for 40 billion dollars (33 billion euros). This deal is being closely scrutinised by competition authorities around the world, as the takeover could potentially have major consequences.

Arm is the licensee of the increasingly popular Arm architecture. The company currently maintains an independent stance on licensing and does not give preferential treatment to specific companies. However, Nvidia also makes its own Arm processors, so there is a risk that this dynamic could change after a takeover. Both companies insist that Arm will not give Nvidia an unfair advantage, but before the acquisition can go ahead, they will have to convince various competition authorities worldwide.

Tip: Why the acquisition of ARM by Nvidia should be prohibited