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Britain has ordered an investigation of NVIDIA’s $40 billion acquisition of Cambridge-based chip maker Arm on national security concerns.
Oliver Dowden, UK’s Digital Secretary, wrote to the country’s competition regulator, Competition and Markets Authority (CMA), instructing them to begin a ‘phase one’ investigation of the deal announced in September .
“Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds,” Dowden said in a statement.
CMA will have to submit an initial report to the Digital Secretary by July 30, 2021, covering potential national security issues along with competition and jurisdictional issues. Besides, the government will examine the national security public interests.
“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,” Dowden said.
Once phase one investigation is completed, Dowden has a few options. He can clear the transaction and related subject to any agreed undertaking, or refer the transaction to a phase two investigation. However, there is no set time period before which the decision must be made.
If the deal is referred to a phase two investigation, the CMA will lead a further investigation of any identified competition and/or public interest concerns. CMA will then make recommendations to the Digital Secretary, advising remedy to any adverse effects.
At the end of a phase two investigation, the Digital Secretary can take action to remedy, mitigate or prevent any effects adverse to the public interest.
Based on the report, if the Digital Secretary thinks there are no public interest concerns, but there are competition concerns, he will instruct the CMA to deal with the merger as an ordinary merger case.