The competition watch-dog stepped into another major global tech takeover today when it ruled that Photoshop owner Adobe’s proposed $20 billion (£15.8 billion) acquisition of fellow digital design firm Figma could harm the UK sector has said.
The Competition and Markets Authority (CMA) said the provisional findings of a investigation into the planned takeover deal found that it would wipe-out competition between two major players.
In the UK it would reduce impact competition in areas such as product design, image editing and illustration – and ultimately stifle innovation.
The watchdog said it would now consult on the provisional finding and any potential remedies to the competition concerns and would also welcome responses by Tuesday December 19.
The CMA said it will make a final decision on the deal by February 25.
Margot Daly, chair of the independent group conducting the investigation, said: “The digital design sector is worth nearly £60 billion to the UK – representing 2.7% of the national economy – and employs over 850,000 people in highly skilled work.
“The software this sector uses is pivotal to its success, so the CMA has from the outset been very focused on ensuring this merger doesn’t adversely affect such an important part of the UK economy.
“This proposed deal has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products
“Adobe and Figma are two of the world-leading providers of software for app and web designers and our investigation so far has found that they are close competitors.
“This proposed deal, therefore, has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products.
“Today’s decision is provisional, and we will now consult on our findings and listen to any further views before reaching a final decision.”
Alex Haffner, competition partner at law firm Fladgate, said: “Today’s announcement by the CMA has been hotly anticipated after the furore surrounding its handling of the Microsoft/Activision case and the fallout about how it handles ‘Big Tech’ related merger investigations.
“On this occasion, however - unlike in Microsoft/Activision -, the CMA appears to be in lockstep with the EU Commission which last week issued a ‘statement of objections’ to the merging parties and cited broadly the same concerns as those raised by the CMA regarding competition on the relevant markets for Image/illustration editing and product design software.
“The challenge will now be for the merging parties to persuade the competition regulators that they have got the analysis wrong in their provisional assessments or, more likely, to come up with a package of remedies which can satisfy their stated concerns. This will again bring to the fore the issues which gained so much traction in Microsoft/Activision regarding the suitability of any such remedies and, in particular, whether they will need to be structural, as opposed to behavioural, in their application to be able to win the day.”
