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Nvidia Corp.’s planned $40 billion takeover of chipmaker Arm Ltd. should get a longer antitrust probe, British regulators warned after rejecting potential concessions.

In the first reaction on the deal from a major antitrust watchdog, the Competition and Markets Authority said in a statement that it was concerned the deal would give Nvidia too much control over semiconductors used in data center services, smart devices and gaming consoles.

Lengthy regulatory reviews can add risk to closing a deal that looks set to overshoot Nvidia’s initial target to close in March 2022. Nvidia hasn’t yet filed for European Union approval, where an extended review takes at least five months.

Nvidia’s move to buy Arm from Japan’s SoftBank Group Corp. initially raised antitrust concerns from rivals and customers such as Qualcomm Inc. and Alphabet Inc.’s Google over how Nvidia might control Arm’s licenses for essential chip technology.

U.K. Digital Secretary Oliver Dowden must still decide whether the CMA should open an in-depth probe. Dowden is also separately weighing whether the deal should be blocked over potential risks to national security. The U.K. is leaning toward a veto, according to a person familiar with the matter earlier this month.

The CMA’s analysis “gives Dowden an excellent opportunity to send the case to a phase 2 without reaching a decision on national security grounds yet,” said Aitor Ortiz, a Bloomberg Intelligence analyst. Antitrust approval is possible if the companies were to agree a more complex solution to solve regulatory concerns, he said.

Nvidia looks “forward to the opportunity to address the CMA’s initial views and resolve any concerns the government may have,” the company said in an emailed statement.

“We remain confident that this transaction will be beneficial to Arm, its licensees, competition, and the U.K.,” it said.

While a longer probe raises the risk of a veto to a deal, it can also give more time for companies to negotiate more complicated concessions. The CMA said it rejected as insufficient Nvidia’s offer to maintain Arm’s open licensing, nor did it see a partial sale of Arm intellectual property as allaying its concerns at this stage.

Arm owns the most widely used set of standards and designs in the $400 billion chip industry. Its technology is at the heart of most of the world’s smartphones and is finding an increasing role in computing, including in server machinery that runs corporate and government systems.

The Cambridge, England-based company has acted as a neutral party that sells chip blueprints and licenses its standards to a wide range of major technology companies, many of whom are fierce competitors. Ownership by Japan’s SoftBank, which acquired it in 2016 and which doesn’t overlap with Arm’s customers, has preserved that neutrality.

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