The European Commission has opened a competition investigation into Nvidia's acquisition of British chip-design company Arm.

The $40bn (£29bn) deal was announced in September.

Regulators are concerned Nvidia could use the move to restrict access to Arm's technology, which powers the vast majority of the world's smartphones.

Nvidia has promised it will maintain Arm's open-licensing model.

Officials said the technology giant, the world's largest graphic and artificial-intelligence chip-maker, had offered concessions in an attempt to address its concerns.

But the commission said it still had "serious doubts" about the deal, which it believes could result in:

less choice
reduced innovation
higher prices for consumers
"Our analysis shows that the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm's IP [intellectual property], with distortive effects in many markets where semiconductors are used," European Commissioner for Competition Margrethe Vestager said.

When Nvidia swooped on Arm in September 2020, it seemed unlikely the deal would be blocked.

After all, this jewel in the crown of Britain's tech industry had already lost its independence in 2016, when its takeover by Japan's SoftBank had been celebrated by the government as a vote of confidence in the post-Brexit economy.

But it seems the voices of those who warned that Arm's unique selling point as a neutral vendor serving the whole chip industry would be endangered have been heard.

Around the world, regulators are deciding they need to take a look at this deal. The UK government kicked things off by invoking national security concerns, with the Competition and Markets Authority weighing in with an investigation into the impact on innovation.

That's also sparked inquiries in Washington and Brussels, while China is worried about American control of this business vital to the emerging internet of things.

Nvidia's hard-driving leader Jensen Huang seems determined to see the deal through, but those who were dismayed when Arm was first sold are hoping for another outcome: a return to the stock exchange as a British company.

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Nvidia said it remained hopeful it could address the regulators' worries and move forward with the acquisition.

"We look forward to the opportunity to address their initial concerns and continue demonstrating that the transaction will help to accelerate Arm and boost competition and innovation, including in the [European Union]," a representative said.

The commission has until 15 March 2022 to decide whether to clear the deal.

It is the second investigation being made into the acquisition - the UK's competition watchdog announced its own earlier this year.

The chip companies had originally hoped to complete the deal by March next year- but that now looks unlikely.