Adobe Systems Incorporated (NASDAQ:ADBE) purchasing rival Figma, the design software provider, could significantly reduce competition in global markets, the European Commission has concluded after spending several months investigating the deal.
If the US$20 billion proposed acquisition were to proceed, competition in the supply of interactive product design tools could weaken due to Figma being a market leader and Adobe being one of its largest competitors, the European regulator said.
“It will result in the discontinuation of Adobe's own interactive product design tool, Adobe XD, as well as any potential successor product and thus constitute a so-called 'reverse killer acquisition',” the European Commission said in a statement.
Companies providing vector or raster editing tools could also be hurt by the deal as eliminating Figma would lead to Adobe exerting a wider dominance in the market.
Should the acquisition fail to take place, Figma is expected to continue developing in these markets and could therefore become an effective competitor against Adobe’s Photoshop and Illustrator, the EU investigators believe.
Adobe boss Dana Rao said he would be open to offering remedies to maintain competition in the industry but with the UK’s CMA in its second phase of investigation, there might be more criticism headed the tech group’s way.
Adobe is trading flat on Monday at around US$502 ahead of its opening in the US.