Adobe Refuses U.K. Remedy Offer Teeing Up Figma Fight With CMA

(Bloomberg) -- Adobe Inc. refused to offer remedies to quell the UK’s concerns with the firm’s planned $20 billion purchase of design software maker Figma Inc., imperiling the biggest ever takeover of a private software company.

Adobe criticized the Competition and Markets Authority’s view that the deal would eliminate competition in product design software, saying that its suggested remedies were “disproportionate,” according to a response published Monday. The firm said it would not offer any fixes at all and is set to meet with the CMA this week to fight its corner.

“It is clear that no realistic remedy would satisfy the concerns the CMA is maintaining,” an Adobe spokesperson said. “We believe that the best path forward is to continue our ongoing engagement with the CMA on the merits.”

Adobe’s purchase 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 CMA said last month that it was considering either blocking the merger or asking for a divestment package that included the selling of Figma’s biggest product, Figma Design, as well as Adobe XD. The agency will make its final decision on the deal by Feb. 25.

European Union regulators are also continuing to examine Adobe’s record deal, with remedies potentially being filed to the watchdog this week. The initial offer may include a commitment not to tie Figma into Adobe’s Creative Cloud package, a bundle of the company’s products, and a potential divestment of Adobe XD, which competes with Figma.

Adobe’s top lawyer, Dana Rao, told Bloomberg in November that his company was prepared to come forward with solutions to appease EU regulators, who had earlier warned that the tie up could harm fair competition in the market for interactive product design tools. The bloc has until Feb. 5 to issue a final decision.

In the US, Adobe is gearing up for a potential lawsuit from the Department of Justice, attempting to block the deal. On an earnings call last week, Adobe disclosed that it expects a decision “soon.”

Adobe’s $20 billion move for Figma is scheduled to close by the end of March. Adobe could owe the design startup a $1 billion breakup fee if it takes longer than that and the deal collapses.

(Updates throughout)

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