US regulators have sued to block Nvidia’s multibillion-dollar acquisition of UK chip design company Arm from SoftBank after European and American authorities raised concerns about the tie-up.
The Federal Trade Commission said in a statement on Thursday that the transaction, which would be the largest takeover of a semiconductor group, would give one of the world’s biggest chip groups control over computing technology and designs that competitors rely on to create their own chips.
The case is the latest significant antitrust move by the Biden administration, which has committed to curb the power of big business by stamping out anti-competitive practices.
The FTC pegged the value of the chip deal at $40bn, but the cash and stock transaction is currently worth $82bn following a jump in Nvidia’s share price. Nvidia would have to pay SoftBank a $1.25bn break-up fee if the deal falls apart.
The regulator alleged that the combined company would “have the means and incentive to stifle innovative next-generation technologies, including those used to run data centres and driver-assistance systems in cars”.
Holly Vedova, director of the FTC’s bureau of competition, said the regulator was acting in order “to prevent a chip conglomerate from stifling the innovation pipeline for next-generation technologies”.
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Nvidia in a statement said it would “continue to work to demonstrate that this transaction will benefit the industry and promote competition”, adding it would invest in Arm’s research & development, maintain its open licensing model and ensure its intellectual property is “available to all interested licensees”.
The FTC’s move comes after Nvidia last month said the regulator had “expressed concerns” about the Arm transaction, and that it was in discussions with the agency about “remedies to address those concerns”.
The UK had previously launched an in-depth investigation into the tie-up on competition and national security grounds. The European Commission began its own extended review in October.
Additional reporting by James Fontanella-Khan