Britain’s top competition watchdog said Tuesday that Adobe’s (NASDAQ:ADBE) proposed $20-billion acquisition of Figma could harm the U.K.’s digital design sector, findings that could mean a major setback for the merger.
The Competition and Markets Authority said the deal could “eliminate competition,” “reduce innovation” and “remove Figma as a threat to Adobe’s flagship Photoshop and Illustrator products,” according to a release.
The findings are provisional, but the regulator said it will investigate potential remedies, “which could include blocking the deal outright.”
Adobe announced plans to buy Figma, which allows users to collaborate on app and website design, for $20 billion in September last year. In addition to regulatory probes in the U.K., the deal has been under scrutiny from the U.S. Department of Justice and the European Union.
“Our provisional conclusion is therefore that the Merger would remove competition between close competitors and an important competitive constraint on Figma, in a market in which Figma is already the strongest player by far and there are few other competitive constraints,” the CMA wrote in the release.
A representative for Figma told the media the company is “disappointed” by the CMA’s findings and that they “strongly disagree” with the idea that Figma competes with Adobe or will do so in the future.
ADBE shares gained 20 cents to $619.47.
