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UK intervenes in Nvidia's Arm takeover on national security grounds

Digital secretary Oliver Dowden has instructed the CMA to begin a “phase one” investigation into the deal

Digital secretary Oliver Dowden has issued a Public Interest Intervention Notice (PIIN) in relation to the proposed sale of Arm to Nvidia on national security grounds.

Dowden has instructed the Competition and Markets Authority (CMA) to begin a “phase one” investigation to assess the transaction. 

The CMA will now prepare a report with advice on jurisdictional and competition issues regarding this takeover. It will also include a summary of potential national security issues arising from a consultation it will launch to consider third-party views.

The move has been taken to allow the government to explore any national security implications as a result of the deal. The CMA has until midnight at the end of 30 July 2021 to complete and submit the report to the 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,” said Dowden.

A CMA spokesperson told IT Pro that the CMA will now seek input from interested parties on national security public interest grounds. This is in addition to its ongoing investigation on competition grounds.

“Following the completion of both pieces of work, we will submit a summary of the responses we receive on national security grounds and our advice on competition issues, to the DCMS Secretary of State,” said the spokesperson.

The “phase one” investigation is meant to analyse issues surrounding competition, jurisdiction and national security. It will also advise if there’s a substantial lessening of competition in any market in the UK, and “whether it would be appropriate to deal with any concerns through undertakings by the parties involved in place of a referral to a ‘phase two’ investigation”.

Following this report, Dowden can then decide to either clear the transaction, clear the transaction subject to any agreed undertakings, or refer the transaction to a “phase two” investigation for further scrutiny.

IT Pro has contacted Arm and Nvidia for comment.

The UK government has been under pressure to block Nvidia’s Arm takeover following industry-wide calls for it to intervene. Shadow business secretary Ed Miliband had also called for legal assurance the company wouldn’t be moved out of the UK, pointing to similar sanctions made during the sale of Arm to Softbank in 2016.

In January, the CMA launched an investigation into the acquisition, where it would analyse what effect the deal would have on the UK market and whether the takeover would hinder rival companies from accessing Arm’s technology. Graphcore, a British semiconductor provider, had reportedly objected to the acquisition too, accusing the deal of being anti-competitive.

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