One thing the TFA says: "Because Arm’s technology is a critical input that enables competition between Nvidia and its competitors in several markets, the complaint alleges that the proposed merger would give Nvidia the ability and incentive to use its control of this technology to undermine its competitors, reducing competition and ultimately resulting in reduced product quality, reduced innovation, higher prices, and less choice, harming the millions of Americans who benefit from Arm-based products, the complaint alleges."

When a downstream firm merges with an upstream supplier that is really important to the downstream firm and its competitors, the merged firm can competitively hobble the downstream competitors. They can refuse to sell the upstream good to competitors, or raise the cost for competitors. Plus it may force the competitors (or potential new entrants) to vertically integrate themselves and enter both the downstream and upstream markets, which chills competition in the downstream market. The government also credits business justifications for the merger, and in the end they balance those with the potential harms to competition.

The article (I can't find the complaint) also says, and this is a typical vertical merger concern, that this will give Nvidia (the downstream firm) access to sensitive information of Nvidia's rivals that they had previously shared with Arm.

EDIT: There is also a general antitrust push in the Biden administration, notably in the appointments of Lina Khan and Tim Wu. Interesting to see its fruits.