Following the initial probe, the British competition watchdog gave time for the parties to offer remedies to address its concerns but Adobe and Figma did not offer such undertakings, which led to the initiation of the phase 2 investigation
The UK Competition and Markets Authority (CMA) has launched an in-depth phase 2 probe into Adobe’s previously announced $20bn acquisition of Figma, a web-first collaborative design platform.
Adobe announced the cash and stock deal in September 2022. In May 2023, the British competition watchdog opened a phase 1 investigation to understand if the deal may give rise to a relevant merger situation under the merger provisions of the Enterprise Act 2002.
Following the initial probe, the CMA, at the end of last month, said that under section 33(1) of the Act, the merger could result in significantly reducing competition within a market or markets in the UK.
The CMA gave time for the parties to offer remedies to address its concerns. However, Adobe and Figma said that they will not offer such undertakings, which led to the initiation of the phase 2 investigation.
The British competition regulator stated: “Therefore, pursuant to sections 33(1) and in accordance with section 34ZA(2) of the Act, the CMA has decided to refer the Merger to its chair for the constitution of a group under Schedule 4 to the Enterprise and Regulatory Reform Act 2013 to conduct a phase 2 investigation.”
According to the CMA’s phase 1 findings, the deal would harm the UK’s digital economy. If the deal went ahead, then it could translate into lesser options for designers of digital apps, websites, and other products, stated the regulator.
The CMA has raised concerns regarding the supply of screen design software, specifically in the competitive market involving Adobe and Figma. As per the competition authority, Figma has gained a significant market share in the screen design software industry, while Adobe has been actively investing in and competing within this particular segment.
The CMA’s phase 1 investigation revealed that the competition between Figma and Adobe has spurred investment in the improvement and advancement of screen design software. However, if the proposed deal moves forward, this crucial rivalry could be at risk of being lost, found the CMA.
A decision on the deal following the phase 2 probe is expected to be made by the CMA in late December 2023.