European Union antitrust regulators are planning to formally investigate Adobe’s proposed $20 billion acquisition of cloud-based designer platform Figma, according to the Financial Times. Regulators are concerned about potential anti-competitive practices and are conducting a detailed review of the deal.
Risks of derailment and anti-competitive concerns
The investigation, which could take several months, poses a significant risk to the acquisition. As it could potentially block the deal. The action by EU regulators follows an investigation by the UK competition watchdog into the Adobe-Figma acquisition.
Earlier this year, there were reports that the U.S. Department of Justice was considering legal action to block the deal. These actions reflect growing global concerns about large technology companies acquiring smaller, innovative competitors and the negative impact on fair competition in the marketplace.
Scrutiny of tech acquisitions and the competitive landscape
The actions taken by regulators underscore the increased scrutiny tech giants face as they pursue growth through acquisitions. Regulators want to prevent market consolidation that could harm competition and innovation.
By subjecting these acquisitions to rigorous antitrust scrutiny, regulators seek to ensure a level playing field. It will help smaller competitors and protect the interests of consumers.
Regulatory requirements and ongoing discussions
The Figma transaction is below the EU revenue threshold for review. However, Adobe has been informed by EU regulators that antitrust clearance is required. Adobe has indicated that it is in productive discussions with regulators in the United Kingdom, the EU and the United States. The regulatory process is at an early stage.
Impact and Uncertainty of Outcome
The outcome of the regulatory review will have a significant impact not only on Adobe and Figma, but also on the broader landscape of technology acquisitions and competition in the industry. The decision will determine whether the deal will proceed, face further delays, or require modifications to address regulatory concerns.
As the regulatory process unfolds, Adobe and Figma will need to navigate potential challenges and address antitrust concerns. It is critical for both companies to demonstrate that the acquisition will not harm competition and will ultimately benefit customers and the marketplace.
At the time of this article, Figma had not responded to request for comment on the matter.