LONDON , Wednesday's investigation by the European Union into Nvidia's purchase of Arm, a designer of graphics chips, was initiated over concerns that it might limit competition. This is in addition to the global scrutiny of this deal.
According to the European Commission, it is concerned that the combined company could have the potential and incentive to limit access to technology from Arm Ltd. in the United Kingdom. Arm Ltd.'s chip designs power most of the world's smartphones.
The EU's highest antitrust authority, the commission, expressed concern that the deal could lead to higher prices, less choice, and lower innovation in the semiconductor industry.
Nvidia Corp. is a California-based company that purchased Arm from Softbank, the Japanese technology giant. Concerns were raised that Arm might abandon its neutral business model, licensing its chip designs for hundreds of tech companies including many of Nvidia’s competitors.
"Our investigation aims at ensuring that companies active in Europe continue to have effective access to technology that is required to produce state of the-art semiconductor products, at competitive prices," stated Margrethe Vestager (EU Commissioner), who is responsible for competition and digital issues.
According to the commission, Nvidia had made concessions to address initial concerns, but they were not enough to remove "serious doubts" regarding the deal.
Arm sent comments to Nvidia for comment, and Nvidia responded that it was "working closely" with them.
Nvidia stated in a statement that they look forward to the chance to address their initial concerns.
The deal must be approved by the commission before March 15. These concerns are similar to those raised by the U.K.'s competition watchdog , which launched its own investigation earlier in the year.
Nvidia has committed to Arm's open licensing model, customer neutrality, keeping Arm's headquarters in Cambridge (England), and expanding its British staff. Nvidia had previously stated that the purchase would not take place until 2022 due to expected scrutiny, including from Chinese and U.S regulators.