The United Kingdom’s Competition and Markets Authority (CMA) raised concerns on Tuesday regarding Adobe’s proposed $20 billion acquisition of Figma, stating that the deal could harm the U.K.’s digital design sector. The regulator’s provisional findings suggest that the acquisition may “eliminate competition,” “reduce innovation,” and “remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products.”
While the findings are not final, the CMA has expressed the possibility of investigating remedies, including potentially blocking the deal outright. Adobe’s acquisition of Figma, a platform enabling collaborative app and website design, was announced in September of the previous year. The deal has faced scrutiny not only from the U.K. but also from the U.S. Department of Justice and the European Union.
The CMA’s provisional conclusion indicates that the merger could eliminate competition between close rivals and diminish a crucial competitive constraint on Figma. Figma is already identified as the strongest player in the market, with limited competitive alternatives. The regulator plans to explore potential remedies to address these concerns.
In response to the findings, a representative for Figma expressed disappointment and strongly disagreed with the idea that Figma competes with Adobe, asserting that Figma operates in a dynamic and highly competitive market for product design and development.
“We remain committed to the deal, confident in the facts, and convinced our proposed combination with Adobe is a win for consumers and should be approved,” the spokesperson added.
Adobe, also expressing disappointment, disagreed with the CMA’s perspective. The company stated that Adobe and Figma together would deliver significant value to customers and mentioned that they are reviewing the provisional findings, planning to reengage with the CMA on the facts and merits of the case.
David Wadhwani, a key executive behind the Figma deal, had previously expressed frustration over the slow pace of regulatory approval in October. While Adobe anticipates closing the deal this year, the company has agreed to pay Figma $1 billion if the merger is not completed by March 2024 or if it faces rejection from regulators.
The CMA has requested responses from both Adobe and Figma by December 19, with a final decision expected to be issued by February 25 next year. The outcome of this investigation will determine the fate of Adobe’s significant acquisition plans in the digital design space.