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Adobe + Figma Deal Blocked?

In the latest Adobe and Figma case development, the Competition and Markets Authority (CMA) revealed it had referred the acquisition for a “phase two” investigation amid concerns that the deal would create a market that sustained “substantial lessening of competition”.  

The regulator has been investigating Adobe’s $20 billion for Figma to prove whether the sale would be ethical as the deal could stifle designer’s choices of websites, digital apps, and other products.  

CMA warned the second investigation will be a more rigorous, longer valuation carried out by an autonomous CMA board. 

The investigation was announced by CMA after Adobe and Figma notified the regulator that they would not offer up resolutions to attend to concerns the merger would trigger a “substantial lessening of competition” for designers in the United Kingdom.

Phase one of the investigation last month ended with the CMA asserting that because of the similarities between Figma and Adobe’s design software, the acquisition would remove a “significant competitive threat to Adobe”.

CMA gave the companies only five working days as a deadline from the announcement to present “acceptable undertakings” that may have allowed the merger to go-ahead without further examination.

For the second phase of its investigation, a legislative deadline of December 27th has been handed down.

In response to The Verge’s request for comment, Dana Rao, Adobe’s general counsel and chief trust officer, shared this reply to the CMA’s judgment:

“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. As demonstrated in our recent strong Q2 earnings, Adobe continues to execute against a massive $200B-plus market opportunity and deliver groundbreaking innovations and industry-leading AI capabilities across our products.”

Additionally, the deal is also being reviewed by regulators abroad in the United States and the European Union.

A conditional deadline has been set of August 7th by the European Commission (EC) to determine deal approval or begin its an EC-led investigation which could put the deal at risk or even block the merger.

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