By Ian Walker

The U.K. Competition and Markets Authority said Friday that Nvidia Corp.'s $40 billion acquisition of British chip designer Arm from SoftBank Group Corp. raises competition concerns and should now be progressed for further investigation.

The regulator said the deal could lead to a loss of competition and stifle innovation across a number of markets leading to more expensive, or lower quality products.

The CMA said Nvidia has offered a behavioral remedy but that this wouldn't alleviate its concerns. A behavioral remedy regulates the continuing behavior of a business.

"We look forward to the opportunity to address the CMA's initial views and resolve any concerns the Government may have," a Nvidia spokesperson said in an emailed statement.

"We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the U.K.," the spokesperson added.

On April 19, the British government said that it wanted the CMA to investigate the deal, citing national security grounds.

The U.K. Secretary of State will decide whether the deal will need an in-depth phase 2 investigation on both competition and national security grounds, or whether it should be passed back to the CMA to investigate on competition grounds only.

A Nvidia spokesman had previously said that the company expected the approval process to take 18 months from the signing of the deal, which was announced on Sept. 14, 2020.

Write to Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

08-20-21 0949ET