The UK competition watchdog has launched an investigation into the $40bn (£29.5bn) takeover of the UK-based chip designer Arm by the US firm Nvidia.
The Competition and Markets Authority has called for interested parties to submit views on the contentious deal before the launch of a formal investigation later this year.
Arm Holdings, which employs 6,500 staff including 3,000 in the UK, is a global leader in designing chips for smartphones, computers and tablets.
Nvidia, a graphics chip specialist, announced its plan to buy the British tech group from Japan’s SoftBank in September.
SoftBank had acquired Arm for $32bn in 2016, when the Japanese firm took advantage of the fall in value of the pound after the Brexit vote. Arm is based in Cambridge but has operations in a number of UK towns and cities, including Manchester, Belfast and Warwick.
Its chief executive, Simon Segars, acknowledged at the time of the Nvidia deal that it could take up to 18 months to win approval from regulators around the world.
On Wednesday, the chief executive of the CMA, Andrea Coscelli, said: “The chip technology industry is worth billions and critical to many of the products that we use most in our everyday lives.
“We will work closely with other competition authorities around the world to carefully consider the impact of the deal and ensure that it doesn’t ultimately result in consumers facing more expensive or lower quality products.”
The CMA said it would examine the possible effect of the deal on competition in the UK and whether Arm had an “incentive to withdraw, raise prices or reduce the quality of its intellectual property licensing services to Nvidia’s rivals”.
If the investigation finds the deal breaches UK competition rules, CMA’s powers extend as being able to block the takeover.
In October, Hermann Hauser, the co-founder of Arm, wrote to the House of Commons foreign affairs committee arguing that if the deal was allowed to proceed the combined firm would become the next US tech monopoly alongside companies such as Google and Facebook.
Hauser also told the BBC the deal would be “an absolute disaster for Cambridge, the UK and Europe”, adding that Nvidia would inevitably decided to relocate Arm to the US, leading staff losing their jobs.
The shadow business secretary, Ed Miliband, has also expressed his opposition towards the deal.