The goals of the Federal Trade Commission (FTC) are to inform and protect customers and to promote and support fair competition amongst companies. It works to stop companies from obtaining and using unfair advantages in the business world and takes action to prevent them from achieving a market takeover while diminishing their competitors. To maintain a level “playing field” for all competitors, the FTC will issue a complaint if they have reason to believe that unlawful activity has occurred.
On December 2, 2021, the Federal Trade Commission filed a motion to block the $40 billion acquisition of Arm Limited (a company from the United Kingdom that provides semiconductor chip designs) by the Nvidia Corporation (a United States supplier of semiconductor chips). If the vertical merger occurs, one of the largest and most successful chip suppliers in the world would not only gain unfair advantage over its competitors, but it could dominate the entire industry.
With a mission statement of “Protecting America’s Consumers,” the Federal Trade Commission filed a complaint stating that the acquisition would create a combined company that would stifle competitors from creating and manufacturing their own products. More specifically, the new company could hinder or prevent the development of new and innovative technology used in driver assistance systems in vehicles and datacenter operation and maintenance programs.
Federal Trade Commission Bureau of Competition Director Holly Vedova stated, “Tomorrow’s technologies depend on preserving today’s competitive, cutting-edge chip markets. This proposed deal would distort Arm’s incentives in chip markets and allow the combined firm to unfairly undermine Nvidia’s rivals. The FTC’s lawsuit should send a strong signal that we will act aggressively to protect our critical infrastructure markets from illegal vertical mergers that have far-reaching and damaging effects on future innovations.”
The official complaint suggests that Nvidia’s acquisition would impact three major markets worldwide: High-Level Advanced Driver Assistance Systems for passenger vehicles, DPU (Data Processing Unit) SmartNICs (Smart Network Interface Cards) which are used to enhance datacenter servers’ performance and security, and Arm-Based CPUs (Central Processing Units) for providers of Cloud Computing Services.
Administrative trial for this case is scheduled for August 9, 2022.