British regulator launches inquiry into the 40 billion dollar purchase of Arm by Nvidia

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Competition and competition watchdog inquiries deal with the acquisition of British chip companies

An inquiry into the $40 billion (£29.5 billion) purchase of British chip designer Arm by U.S.-based Nvidia has been initiated by the U.K. Competition and Markets Regulator.

Until a formal inquiry is conducted later this year, the Competition and Markets Regulator has called on interested parties to comment on the contentious contract.

Arm Holdings is a global leader in the production of chips for smartphones, laptops and tablets, employing 6,500 people, including 3,000 in the U.K.

In September, graphics chip specialist Nvidia revealed it will buy the British tech business from SoftBank of Japan.

In 2016, SoftBank purchased Arm for $32 billion as the Japanese corporation took advantage of the collapse in the value of the pound after the Brexit referendum.

Arm is headquartered in Cambridge but has a number of U.K. offices. Cities like Manchester, Belfast and Warwick, among others.

At the time of the Nvidia contract, the company’s chief executive, Simon Segars, admitted that it would take up to 18 months to get approval from regulators worldwide.

“The chip technology industry is worth billions and is critical to many of the products we use most in our daily lives,” CMA chief executive Andrea Coscelli said Wednesday.

“We will work closely with other competition authorities around the world to carefully assess the impact of the deal and ensure that it does not ultimately lead to consumers being faced with more expensive or lower quality products.”
The CMA said it will examine the possible effect of the agreement on competition in the United Kingdom and whether Arm has a “incentive to withdraw, raise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals.”

The CMA has the ability to stop the acquisition if the investigation concludes that the offer violates U.K. antitrust laws.

Arm co-founder Hermann Hauser wrote to the House of Commons Foreign Affairs Committee in October claiming that if the merger went through, the merged firm would become the next U.S. tech monopoly alongside companies such as Google and Facebook.

Hauser also told the BBC that the agreement would be “an absolute disaster for Cambridge, the UK and Europe,” adding that Nvidia would eventually seek to move Arm to the United States, causing staff to lose their jobs.

The shadow business secretary, Ed Miliband, has also expressed opposition to the deal.

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