Regulator delays Adobe's $20B buy of Figma, derails deal deadline

Competition and Markets Authority needs more time to consider 'complex case', new deadline set for February 2024

Updated Britain's competition regulator is extending into 2024 its prolonged investigation of Adobe's $20 billion purchase of Figma, upending the software giant's plan to complete the transaction by the end of this year.

The eye-wateringly expensive proposal was made by Adobe some 13 months ago, and so far the US Department of Justice, the EU antitrust team and the UK’s Competition and Markets Authority are closely considering the potential consequences for customers and rivals.

For the uninitiated, Figma is a web-first design collaboration startup that created a vector-based design editing and graphic vector tool. Its browser-based app manages file organization by listing projects and their files in a dedicated format. No installation, or patching and no updates. It was founded in 2016 and received $332.9 million funding.

The CMA launched a deeper probe in July and has now confirmed that its own findings won't be reported by December 31, itself a revision from the earlier December 27 deadline.

"The Inquiry Group consider that completion of its investigation and the publication of its final report will not be possible within there revised reference period," the CMA said [PDF].

The new date aimed for is February 25, 2024, or eight weeks later than was initially scheduled. The regulator said it "considers that there are special reasons to" extend the inquiry, and that it "aims to complete the inquiry as soon as possible and in advance of this date."

The "complexity of the case," combing through the relevant party submissions, and the "important aspect of competition, specifically competition in product development between firms" were given as reasons for taking the decision.

The CMA added:

"This dynamic competition involves efforts or investments aimed at protecting or expanding a firm's market position and profits in the future. As such, the competitive assessment needs to consider, amongst other matters, the merger parties' growth strategies, including innovations, investments and product development and how such matters impact the parties' abilities and incentives to enter or expand in the relevant markets."

In July, the competition watchdog highlighted worries the tie-up could "stifle innovation and lead to higher costs for companies" that rely on tools made by Figma or Adobe.

Some of Figma's four million customers are worried that Adobe will merge its XD product with Figma, and up subscription prices, although Figma co-founder Dylan Field has said this won't happen.

Should the transaction not happen, Adobe will pay Figma a termination fee of $1 billion. Adobe execs had in March anticipated the deal being completed by the close of the year.

"From the outset, we have been well prepared for all potential scenarios while realistic about the regulatory environment," said Adobe CEO Shantanu Narayen in the spring.

He added: "Adobe remains confident in the facts underlying the case. And based on current process timing, we believe the transaction continues to be on track for a close by the end of 2023."

We asked Adobe to comment today and the European press office said our request had been sent to PR overlords in the US. ®

Updated to add:

Adobe has been in touch to say: "The combination of Adobe and Figma will deliver significant value to customers by making product design more accessible and efficient, reimagining creative capabilities on the web and creating new categories of creativity and productivity. We have been delighted to hear overwhelmingly positive feedback from customers worldwide and are excited about the economic benefits the deal will bring."

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