Digital Secretary asks CMA to carry out further investigation into NVIDIA’s takeover of Arm

Competition and Markets Authority (CMA) will now carry out a 24-week ‘Phase 2' investigation

From:

Department for Digital, Culture, Media & Sport and The Rt Hon Nadine Dorries MP

• Digital Secretary Nadine Dorries orders Phase Two investigation on national security and competition grounds

Digital Secretary Nadine Dorries has today written to the CMA instructing them to carry out an in-depth Phase Two investigation of the proposed acquisition of Arm by NVIDIA on competition and national security grounds.

The Digital Secretary has ‘quasi-judicial’ powers under the Enterprise Act 2002 to intervene in certain mergers on public interest grounds. Today’s decision follows the completion of the Phase One process during which the CMA conducted an initial investigation of the potential competition implications of the transaction.

The CMA found the transaction raises the possibility of a “substantial

lessening of competition across four key markets” - data centres, Internet of Things, the automotive sector and gaming applications. The full Phase One report has been published today.

In addition, following the consideration of evidence gathered from departments across government, the Secretary of State also deems that the interest of national security continues to be relevant and should be subject to further investigation.

Arm, which is headquartered in Cambridge, licenses semiconductor intellectual property and is a major player in the global semiconductor industry, with tens of billions of Arm-based chips used worldwide. The chips, based on Arm’s intellectual property, power smartphones and are contained in a considerable proportion of connected devices within homes, cars and businesses. While not all individual devices relying on Arm-based chips are necessarily classed as ‘critical’ in themselves, the security and resilience of the broader supply chain is important for UK national security.

Digital Secretary Nadine Dorries said:

I have carefully considered the Competition and Market Authority’s ‘Phase One’ report into NVIDIA’s proposed takeover of Arm and have decided to ask them to undertake a further in-depth ‘Phase Two’ investigation.

Arm has a unique place in the global technology supply chain and we must make sure the implications of this transaction are fully considered. The CMA will now report to me on competition and national security grounds and provide advice on the next steps.

The government’s commitment to our thriving tech sector is unwavering and we welcome foreign investment, but it is right that we fully consider the implications of this transaction.

The CMA will now lead the Phase Two investigation covering both competition and national security. It will have 24 weeks (subject to a possible eight-week extension) to conduct this investigation and deliver a final report to the Digital Secretary.

Next steps

When the Digital Secretary has received the report, she must decide from the following options:

• to make an adverse public interest finding in relation to the acquisition on national security and/or competition grounds, and, if so, to take action to remedy any adverse effects to the public interest;

• to make no adverse public interest finding and refer the case back to the CMA to remedy any competition concerns identified.