Adobe’s proposed $20 billion acquisition of cloud-based product design platform Figma has encountered opposition from the European Union (EU) due to antitrust concerns. The EU has issued a formal antitrust complaint, known as a Statement of Objections. The statement outlines its competition concerns regarding the potential merger. This move reflects the EU’s preliminary view that the acquisition may reduce competition in the market.
EU regulators formally filed antitrust charges against Adobe and opposed its $20 billion acquisition of the cloud product design platform Figma. The European Commission launched an in-depth probe on August 7. On Friday, it tentatively concluded that if the deal is successful, it may “significantly reduce” competition in the global market for interactive product design tools, vector editing tools and raster editing tools. The U.K.’s Competition and Markets Authority is conducting a similar in-depth probe into the deal. Furthermore, there are rumours that the U.S. Department of Justice is also preparing antitrust proceedings to block the deal.
The EU said
“The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it. The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).”
EU’s Antitrust Concerns
The European Commission has expressed apprehensions that Figma already exerts a “significant constraining influence” over Adobe’s Illustrator and Photoshop editing tools and is “significantly likely” to grow into a competitive force within the market for vector and raster editing tools without the merger. The EU agency opened a full-scale probe into Adobe’s proposed acquisition in August. It claims that it could reduce competition in the global market.
The European Commission issued a statement of dissent reflecting its competition concerns. The statement emphasized that EU officials believe that Figma has had a “significant constraining impact” on Adobe’s tools. The EU says in the absence of a merger, Figma is “likely” to become the dominant player in the market for vector and raster editing tools. A real competitive force that should not be taken out.
The statement of objections does not predict the outcome of the EU probe, which still has a deadline of February 5. Adobe and Figma can now respond to objections in writing, offer concessions that address the commission’s specific regulatory concerns, and request a hearing, after which the commission will decide whether the acquisition violates antitrust laws.
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The Commission’s Statement of Objections does not prejudge the outcome of the probe. From the EU’s statement, Adobe and Figma have until February 5th to respond to the objections. They have to respond in writing and offer concessions that address the Commission’s regulatory concerns. They also have the option to request a hearing, after which the Commission will decide whether the acquisition infringes on antitrust law.
Adobe’s and Figma’s Response
Adobe remains confident in the merits of its case. It asserts that Figma’s product design is an adjacency to Adobe’s core creative products. The company also claims it has no meaningful plans to compete in the product design space. However, to date, both Adobe and Figma have reportedly not provided any remedies to address the antitrust concerns raised by the probe. They have a few months to present their response.
In a statement to Bloomberg, an Adobe spokesperson said: “We remain confident in the merits of our transaction because Figma’s product design is an adjacent area to Adobe’s core creative products and Adobe does not have a meaningful presence in the product design area. competition plan.”
A spokesperson for Figma also told Bloomberg, “We feel confident that we have addressed the regulators’ concerns and will continue to have a constructive dialogue focused on the innovation this deal will bring to consumers and Europe. Economic benefits.”
Adobe announced the deal earlier this year after it began phasing out Adobe XD, a UX/UI product design app similar to Figma. The Commission now claims that eliminating Adobe XD, and any potential follow-up products, would constitute a “reverse killer acquisition,” in which a company eliminates an in-house product in order to eliminate potential competitive risks from a newly acquired product or service.
The EU’s issuance of a Statement of Objections against Adobe’s $20 billion bid for Figma reflects the regulatory body’s commitment to maintaining fair competition in the market. The outcome of this antitrust investigation will be crucial in determining the future landscape of the product design and editing tools market.
In summary, the EU’s antitrust warning to Adobe over its proposed acquisition of Figma underscores the regulatory scrutiny surrounding large-scale mergers and acquisitions, particularly in the technology sector. The investigation and subsequent decision by the European Commission will have significant implications for the competitive dynamics within the product design and editing tools market. What do you think about the EU’s position on the deal? Let us know your thoughts in the comment section below
Efe Udin is a seasoned tech writer with over seven years of experience. He covers a wide range of topics in the tech industry from industry politics to mobile phone performance. From mobile phones to tablets, Efe has also kept a keen eye on the latest advancements and trends. He provides insightful analysis and reviews to inform and educate readers.