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UK antitrust regulators pose threat to Adobe’s $20 billion Figma bid

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Adobe’s planned acquisition of Figma, a cloud-based design platform, valued at $20 billion, is now facing a comprehensive investigation led by the United Kingdom’s competition regulatory body. The outcome of this examination will determine whether the merger receives approval or faces complete rejection.

The Competition and Markets Authority (CMA) recently announced the referral of the acquisition for a “phase two” investigation. This thorough assessment will be conducted by an independent panel appointed by the CMA.

Adobe and Figma notified the regulatory authority of their inability to provide satisfactory resolutions to address concerns raised about the potential “substantial lessening of competition” that the merger could pose for designers in the United Kingdom, leading to the initiation of this phase two investigation.

UK Antitrust Regulators Initiate “Phase Two” Investigation into Adobe’s $20 Billion Figma Acquisition

Following the initial “phase one” investigation, the Competition and Markets Authority (CMA) concluded that the acquisition would eliminate a significant competitive threat to Adobe. The decision was based on the similarities observed between Figma and Adobe’s comprehensive product design software, Adobe XD.

In response, the CMA imposed a deadline of July 7th, providing the companies with only five working days to propose acceptable measures that could potentially enable the merger to proceed without further scrutiny. The CMA has now set a statutory deadline of December 27th to conclude the second phase of its investigation.

In addition to the ongoing assessment by UK regulators, Adobe’s $20 billion bid for Figma is also under scrutiny by regulatory bodies in the United States and the European Union (EU).

The European Commission has set a provisional deadline of August 7th to determine whether to approve the deal or initiate its comprehensive investigation that may impede the merger.

The initial inquiry conducted by the Competition and Markets Authority (CMA) revealed that Figma’s web collaboration platform held a significant market share. The CMA expressed concerns that if Adobe were to acquire Figma, it would eliminate a competitive “rivalry” in the market, potentially resulting in higher prices and reduced innovation.

However, Adobe argues that the acquisition of Figma would enhance the products of both companies. By incorporating some of Figma’s collaborative features, Adobe’s Creative Cloud applications would see improvements, while Figma’s platform would benefit from additional functionality offered by Adobe.

Despite the challenges, Adobe remains hopeful of finalizing the merger with Figma by the end of the year. It is crucial to note that Adobe is still under investigation by regulatory authorities in the United States, and the European Union is expected to make its decision by August 7th.

Completion of the purchase is not guaranteed within the anticipated timeframe or at all, considering the possibility of the merger being blocked or subjected to a prolonged review by any of these regulatory agencies. In such a scenario, Adobe would need to reassess its plans accordingly.

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