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Adobe’s $20bn deal to buy Figma is facing a fresh setback as regulators in Brussels prepare to file anti-competitive charges against the companies, an escalation that signals the EU believes the acquisition will harm rivals in the digital design market.
The charges, which might come as early as this week, will flesh out the EU’s concerns that the merger could lead to less innovation and higher prices, according to two people with direct knowledge of the probe.
In June, the Financial Times reported that the deal, which was announced in September 2022, was facing a long EU antitrust investigation because of competition concerns. The European Commission, the EU’s executive arm, said the deal needed to be scrutinised in Brussels even if the companies’ sales in Europe were too low to require a probe.
Brussels said then that scrutiny was required because the deal “threatens to significantly affect competition in the market for interactive product design and whiteboarding software”.
EU officials are increasingly worried that the merger represents what they view as a “killer acquisition”, whereby a large company acquires a smaller competitor to eliminate rivalry.
The commission declined to comment on Tuesday. Adobe did not immediately reply to a request for comment. Figma declined to comment.
The move represents the latest legal challenge to the deal, which is already facing a long investigation in the UK, where authorities are seeking to determine whether the transaction will lead to a market with fewer products, improvement in existing ones and less competition.
A preliminary assessment of the deal already revealed a “substantial lessening of competition” in the UK. In the US, the Department of Justice is reportedly preparing a lawsuit to block the transaction. Adobe has already indicated it is ready to deal with probes as regulators intensify their scrutiny of large tech transactions.
The $20bn deal, which was announced in September 2022, values Figma at roughly 50 times its annual recurring revenue. The price is double the amount the maker of cloud-based design tools was valued at in a private funding round in 2021.
It also represents a tenfold jump compared with Figma’s value in 2019.
Figma and Australia-based Canva are prominent developers of cloud-based design tools. These tools are known for offering improved performance compared with Adobe’s offerings, such as Photoshop — a market leader in image editing for many years.