After a long period of regulatory uncertainty regarding the planned acquisition of Arm by NVIDIA, the executive branch of the European Union, the European Commission, announced that it had opened a formal investigation into the deal. Citing concerns about competition and the importance of Arm’s intellectual property, the Commission launched a 90-day merger review process to determine whether those concerns were justified and therefore whether the merger should be modified or completely blocked. Given the 90-day deadline, the Commission has until 15 Marchth In 2022, announce the decision.
At a high level, the EC’s concern depends on the fact that Arm is an IP provider for both NVIDIA and its competitors. Which has led the EC to be concerned about whether NVIDIA will use its ownership of Arm to restrict or otherwise jeopardize Arm’s access to Arm’s IP. This is considered a particularly worrying scenario given the breadth of device categories that contain Arm chips – everything from toasters to data centers. Also, the EC will also examine whether the merger could lead to NVIDIA giving priority to research and development of IPs that NVIDIA uses intensively (eg data center processors) to the detriment of other types of IPs used by other users.
It is worth noting that this will be a slightly different type of revision than usual for the EC. Since NVIDIA and Arm are not competitors – which even the EC notes – this is not a typical competitive merger. Instead, the investigation will focus on downstream effects so that a large supplier also becomes a competitor.
All in all, the need for a review is not terribly surprising. Given the volume of work of $ 40 billion, the number of Arma customers (pretty much all of them) and the number of countries involved (again, almost all), there was always a good chance that one or more nations could explore the business. However, the EC investigation means that, even if approved, the deal will almost certainly not be closed until March as previously planned.
“Semiconductors are everywhere in the products and devices we use every day, as well as in infrastructure such as data centers. While Arm and NVIDIA do not compete directly, Arm’s IP is an important input in products that compete with those of NVIDIA, for example in data centers, the automotive industry and the Internet of Things.Our analysis shows that NVIDIA’s acquisition of Arm could lead to limited or degraded access to Arm’s IP, with distortion effects in many markets where semiconductors are used.Our investigation aims to ensure that companies active in Europe continue to have efficient access to the technology necessary to produce state-of-the-art semiconductor products at competitive prices. “
–Executive Vice President Margrethe Vestager
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