U.K. Opens 'Phase 2' Probe into Adobe’s $20 Billion Figma Deal

U.K. Opens 'Phase 2' Probe into Adobe’s $20 Billion Figma Deal

News by Nikola DjuricNikola Djuric
Published: July 14, 2023

The United Kingdom’s Competition and Markets Authority (CMA) recently announced it will begin “phase two” of its investigation into Adobe’s proposed $20 billion acquisition of collaborative design platform Figma.

This “phase two” confirms the CMA will conduct an in-depth investigation into the merger to determine whether it could harm competition. If the CMA finds that the acquisition is likely to harm competition, it can prohibit it or accept undertakings from the merging parties to remedy the concerns.

The CMA unveiled its decision on Thursday after Adobe and Figma informed the agency that they wouldn’t provide resolutions to address concerns the merger would lessen competition for designers across the U.K.

“We remain confident in the merits of the case as Figma’s product design is an adjacency to Adobe’s core creative products and Adobe has no meaningful plans to compete in the product design space. We look forward to establishing these facts in the next phase of the process and successfully completing the transaction,” Adobe’s Chief Trust Officer Dana Rao told the Verge commenting on the CMA’s action.

The CMA’s probe focuses on two key areas:

  • Concerns whether the deal would give Adobe too much power in the design software market since the U.S. tech giant is already a leading player with its Adobe XD tool. The acquisition of Figma would arguably give it a dominant position, allowing it to raise prices or reduce innovation.
  • Concerns about the deal possibly reducing competition from other design software providers. As Figma is a popular design platform, the acquisition could make it more difficult for other providers to compete.

U.S. And EU Are Also Reviewing the Deal

U.S. and EU regulators are also assessing the$20 billion merger.

The U.S. Justice Department was preparing an antitrust lawsuit seeking to block the merger back in February, according to Bloomberg’s sources, with Adobe executives reportedly meeting government officials to discuss their concerns.

While the suit was expected to be revealed in the spring, no additional news has come.

Meanwhile, the European Commission confirmed last week it would decide whether to clear the deal by August 7 following a preliminary review.

The EU initiated the investigation following its previous warning that the merger could substantially impact competition in the interactive product design and whiteboarding software market.

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