Europe prepares to present the latest legal challenge to Adobe’s purchase of Figma. After a lengthy antitrust investigation, the European Commission could file anti-competitive charges in an attempt to stop the transaction. Regulators say the deal will seriously harm competition.
According to a report from Financial Timestwo sources close to the investigation confirmed that Brussels would present the charges this week. Authorities believe the merger will lead to less innovation. By paying $20 billion for Figma, Adobe would get rid of one of its main competitors.
Although the agreement initially went unnoticed because it did not reach the turnover threshold of the Merger Regulation, The European Commission recommended a phase 2 investigation, one of the most detailed. The executive arm of the European Union made the decision after receiving a letter signed by several member countries establishing the risks posed by the operation.
For the Commission, The purchase would significantly affect competition in the design market. Figma is one of the leaders in the whiteboard software and product design segment, rivaling Adobe XD. The authorities consider that, if the agreement is approved, Adobe would put a stop to innovation and increase prices.
A few weeks ago, the Commission resumed the antitrust investigation that it began in the middle of the year. After a month-long pause to collect data from Adobe and Figma, authorities established the February 5, 2024 deadline to approve or deny the purchase.
The purchase of Figma is complicated for Adobe
The filing of anticompetitive charges by the European Commission will not be the only obstacle that Adobe and Figma will have to overcome. The merger agreement is in the crosshairs of other regulators, who aim to block the transaction.
The UK Competition and Markets Authority (CMA) announced in July that would launch a detailed investigation amid fears that the merger would cause a substantial decrease in competition. The CMA has until December 27, 2023 to make a decision.
On the other hand, the Department of Justice The United States prepares a lawsuit to block the purchase from Figma by Adobe. Authorities believe that this agreement would limit the options of design professionals. Bloomberg reported a few months ago that there was an approach with the companies to address concerns.
The merger agreement between Adobe and Figma comes at a difficult time for both companies. Regulators have paid more attention to big technology and the most recent example is the purchase of Activision Blizzard. The authorities gave the go-ahead, but not before demanding concessions in some markets to ensure competition.
It is almost a fact that Adobe will have to make adjustments to its offering before receiving the green light in Europe and other countries.