The European Union has tossed a spanner in the works of chipmaker Nvidia’s proposed acquisition of Tel Aviv-based AI workload management startup Run:ai. The deal, which was announced back in April — with a price-tag of $700 million per our sources — will be reviewed by the bloc after a request by competition regulators in Italy under the EU Merger Regulation (EUMR).
The proposed transaction does not meet the EUMR’s standard notification thresholds. However EU law allows a national regulator to notify a transaction to the Commission if it believes it poses serious risks for competition locally and which could affect trade within the bloc’s Single Market.
“Italy submitted a referral request to the Commission pursuant to Article 22(1) of the EUMR. This provision allows Member States to request the Commission to examine a merger that does not have an EU dimension but affects trade within the Single Market and threatens to significantly affect competition within the territory of the Member State(s) making the request,” the Commission wrote in a press release Thursday.
The EU’s acceptance of the referral means it agrees the proposed transaction meets the criteria for referral under Article 22.
“In particular, the transaction threatens to significantly affect competition in the markets where NVIDIA and Run:ai are active, which are likely to be at least European Economic Area-wide and therefore include the referring country Italy,” the EU wrote. “The Commission also concluded that it is best placed to examine the transaction given its knowledge and case experience in related markets.”
The Commission has now asked Nvidia to notify the transaction — a formal step which means the chipmaker must prepare documentation to inform the bloc’s competition enforcers of the details of the proposed merger in order that they can assess impacts.
Nvidia cannot implement the transaction before notifying and obtaining clearance from the Commission. So, at a minimum, the referral may add a few weeks to its timeline for completing the deal. However if the EU’s preliminary check identifies specific issues of concern the bloc may move to a deeper investigation — which could add months of delay and uncertainty.
While Big Tech enjoyed many years of minimal oversight of its (killer) acquisitions of startups and smaller rivals there has been a change of approach over the last few years as regulators recognized the anti-competitive legacy of sitting on their hands for so long while a few platform giants gobbled up market power.
With AI, the rapidly developing software field where innovation is dependent upon access to a small number of key inputs — such as the graphics processing units, or GPUs, that Nvidia has geared towards training AI models — the spectre of a rapid repeat of the market concentration issue has encouraged swifter vigilance from antitrust enforcers.
Though, as yet, no harder action. So it will certainly be interesting to see what the Commission’s review concludes here.
Nvidia has been contacted for comment.