March 4, 2024
Britain’s high competitors watchdog mentioned Tuesday that Adobe‘s proposed $20 billion acquisition of Figma might hurt the U.Ok.’s digital design sector, findings that would imply a significant setback for the merger.

The Competitors and Markets Authority mentioned the deal might “eradicate competitors,” “cut back innovation” and “take away Figma as a risk to Adobe’s flagship Photoshop and Illustrator merchandise,” based on a launch. The findings are provisional, however the regulator mentioned it is going to examine potential cures, “which might embrace blocking the deal outright.”

Adobe introduced plans to purchase Figma, which permits customers to collaborate on app and web site design, for $20 billion in September final yr. Along with regulatory probes within the U.Ok., the deal has been below scrutiny from the U.S. Division of Justice and the European Union.

“Our provisional conclusion is subsequently that the Merger would take away competitors between shut rivals and an necessary aggressive constraint on Figma, in a market wherein Figma is already the strongest participant by far and there are few different aggressive constraints,” the CMA wrote within the launch.

A consultant for Figma informed CNBC the corporate is “dissatisfied” by the CMA’s findings and that they “strongly disagree” with the concept that Figma competes with Adobe or will achieve this sooner or later.

“The info are Figma operates in a dynamic and highly-competitive marketplace for product design and improvement, and Figma has not spent a single greenback or employed a single engineer to construct artistic instruments,” the spokesperson mentioned. “We stay dedicated to the deal, assured within the info, and satisfied our proposed mixture with Adobe is a win for customers and needs to be accepted.”

Adobe mentioned it’s “dissatisfied” and disagrees with the CMA’s perspective.

“Adobe and Figma will ship important worth to clients,” Adobe informed CNBC in an announcement. “We’re reviewing the provisional findings and can reengage with the CMA on the info and deserves of the case.”

David Wadhwani, a key Adobe govt behind the Figma deal, expressed frustration in October over the gradual tempo of regulatory approval. The corporate has beforehand mentioned it expects to shut the deal this yr, and Adobe has agreed to pay Figma $1 billion if both the merger will not be accomplished by March 2024 or it’s rejected by regulators.

The CMA requested responses from Adobe and Figma by Dec. 19. The regulator mentioned a closing choice will probably be issued by Feb. 25 subsequent yr.

–CNBC’s Jordan Novet contributed to this report.

Watch: CNBC’s interview with Adobe CEO Shantanu Narayen