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The European Union has thrown a spanner in the works for chipmaker Nvidia’s proposed acquisition of Tel Aviv workload management startup Run:ai. The deal, announced in April – at a cost of $700 million, per our sources – will be reviewed by the bloc following a request from Italy’s competition regulators under the European Union Merger Regulation (EUMR).
The proposed transaction does not meet the standard EUMR notification thresholds. However, EU law allows a national regulator to notify the Commission of a deal if it believes it poses serious risks to competition domestically and could affect trade within the bloc’s single market.
“Italy has submitted a referral request to the Commission pursuant to Article 22(1) of the EUMR. This clause allows Member States to request the Commission to study a merger that has no European Union dimension but affects trade within the Single Market and threatens to significantly affect competition within the territory of the State ( Member States submitting the request wrote in a press release Thursday.
The EU’s acceptance of a referral means that it agrees that the proposed transaction meets the criteria for a referral under Article 22.
“In particular, the deal threatens to significantly impact competition in the markets in which NVIDIA and Run:ai are active, which are likely to be at least at the European Economic Area level, thus including the referring country Italy,” the EU wrote. “The committee also concluded that it was better placed to examine the transaction given its knowledge and experience in the relevant markets.”
The Commission has now asked Nvidia to notify the deal – a formal move that means the chipmaker must prepare documentation to inform the bloc’s bidders of the details of the proposed merger so they can assess the impacts.
Nvidia cannot implement the deal before being notified and obtaining clearance from the Commission. So, at the very least, the referral might add a few weeks to their timeline to close the deal. However, if the EU’s initial examination identifies specific issues of concern, the bloc may move to a deeper investigation — which could add months of delay and uncertainty.
While Big Tech has enjoyed many years of minimal oversight of (killer) acquisitions of startups and smaller competitors, there has been a change in approach over the past few years as regulators recognize the anti-competitive legacy of sitting on their hands for too long while a number of Few platform giants have market power.
With artificial intelligence, a rapidly evolving software field where innovation relies on access to a small number of key inputs — such as graphics processing units, or GPUs, which Nvidia has directed toward training AI models — the specter of rapid market iteration has encouraged the issue of focus on vigilance. Faster than antitrust officials.
Although no more difficult action has been taken yet. So it will certainly be interesting to see what the committee’s review turns out to be here.
Nvidia has been contacted for comment.
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