Adobe Inc.’s planned $20 billion purchase of design software maker Figma Inc. risks being blocked by Britain’s competition watchdog unless it offers up remedies to solve competition issues.
The Competition and Markets Authority said its early view is that the deal could eliminate competition in product design software, reduce development of new products, and remove Figma as a competitor, according to a statement Tuesday. The decision falls in line with the European Union regulator, which sent a list of objections to Adobe earlier this month.
Shares in California-based Adobe fell 0.7% in pre-market trading.
The investigation sets the table for a prolonged investigation from the CMA after it emerged bruised from its public merger battle with Microsoft Corp. over the $69 billion Activision Blizzard Inc. acquisition. A deal that was ultimately approved after months of twists and turns.
The CMA’s head Sarah Cardell, warned that companies looking to get deal approval in the UK shouldn’t follow Microsoft’s tactics by drawing out the merger process and offering workable remedies too late. The US Department of Justice Department was said to be preparing a suit against the deal earlier this year but is yet to issue proceedings.
Adobe’s purchase, the biggest ever takeover of a private software company, is seen as a massive bet that more creative work will be done by small businesses and everyday users on the web, a market that Figma has rapidly seized. While Adobe has introduced less-expensive, products for that audience, most of its offerings are still heavyweight programs aimed at specialists.
The EU warned that it may block the deal if adequate remedies aren’t offered. High-level company executives will travel to Brussels to hold talks with the EU’s merger officials — tentatively scheduled for Dec. 8, according to people familiar with the matter.
Read More: Adobe’s $20 Billion Figma Deal Gets EU Warning Shot
The CMA said it is now considering whether to block the merger or whether a divestiture may solve its concerns. It said that it would consider the selling of a product from each of the company’s overlapping softwares. The watchdog will make a final decision by Feb. 25.
“We are disappointed in the CMA’s findings and disagree with the CMA’s perspective on this transaction,” an Adobe spokesperson said.
--With assistance from Alexandra Muller.
(Updates throughout)