Mergers: Commission opens in-depth investigation into the proposed acquisition of Figma by Adobe
The European Commission has opened an in-depth investigation to assess, under the EU Merger Regulation, the proposed acquisition of Figma by Adobe. The Commission is concerned that the transaction may reduce competition in the global markets for the supply of interactive product design software and for digital asset creation tools.
Adobe is a global software company offering, among others, creative design software tools (e.g., Illustrator and Photoshop) and an interactive product design tool (Adobe XD). Figma is a provider of a web-based collaborative tool for interactive product design (Figma Design) as well as a whiteboarding tool.
The Commission's preliminary competition concerns
The Commission's preliminary investigation indicates that the transaction may allow Adobe to restrict competition in the global markets for the:
- Supply of interactive product design tools given: (i) that Figma is the clear market leader and Adobe one of its largest competitors, that Adobe and Figma are close competitors and that the transaction would remove an important competitive force, and (ii) the unlikely timely and credible entry of other players in the market.
- Supply of digital asset creation tools by: (i) eliminating Figma's current constraining influence over Adobe's digital asset creation tools, and (ii) preventing Figma's potential growth into an effective competitor to Adobe's asset creation tools, absent the transaction.
Furthermore, the Commission will further investigate whether the transaction may foreclose rival providers of interactive product design tools by bundling Figma with Adobe's Creative Cloud suite.
The Commission will now carry out an in-depth investigation into the effects of the proposed transaction to determine whether its initial competition concerns are confirmed.
The Commission closely cooperated with other competition authorities during the initial investigation and will continue such cooperation during the in-depth investigation.
The proposed transaction was notified to the Commission on 30 June 2023. The Commission now has 90 working days, until 14 December 2023, to take a decision. The opening of an in-depth inquiry does not prejudge the outcome of the investigation.
Companies and products
Adobe is a US global software company offering products that enable the creation and delivery of digital content, such as Photoshop, Illustrator, Premiere Pro and XD. Adobe has significant operations both worldwide and in all countries of the European Economic Area (‘EEA'). Adobe offers most of its tools standalone as well as in bundles, such as its so-called Creative Cloud Bundle.
Figma is a US global software company offering products for interactive product design, namely Figma Design (a collaborative design software) and FigJam (a whiteboarding product).
Merger control rules and procedures
The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or a substantial part of it.
The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).
In addition to this proposed transaction, there are currently four on-going Phase II merger investigations: (i) the proposed acquisition of iRobot by Amazon; (ii) the proposed creation of a joint venture between Orange and MasMovil; (iii) the proposed acquisition of eTraveli by Booking; and (iv) the proposed acquisition of Asiana by Korean Air.