The EU Commission receives a merger referral from the Dutch Competition Authority concerning a proposed acquisition of a web-based interactive product designer by a rival (Figma / Adobe)

European Commission to assess the acquisition of Figma by Adobe*

The European Commission will assess the acquisition of Figma by Adobe. Various European competition authorities support the request filed by the Austrian competition authority with the European Commission to assess this acquisition.

Figma’s flagship product is a web-based interactive product design tool. This tool makes it easier for designers to create interactive digital products together such as software applications and websites. Adobe is a global software company, known for its products Acrobat Reader and Photoshop. Adobe, too, offers a tool for interactive product design. The Netherlands Authority for Consumers and Markets (ACM) has concerns that this acquisition may be harmful to competition, and may lead to higher prices, reduced quality or less innovation in the Netherlands and the rest of the European Union. This is because, as a result of the acquisition, a major competitor of Adobe will leave the market.

Martijn Snoep, Chairman of the Board of ACM, explains: “Figma is an innovative company that offers an online collaboration platform for product design of, for example, software applications. If too little competition remains in the market after the acquisition, there is a risk that innovation will be stifled. That is why we are glad that the European Commission is willing to look into this acquisition, at the request of several national competition authorities including ACM.”

Why is this case important?

Although there are more companies that offer tools for interactive product design, Figma’s product plays an important role in the market. In that context, it is not just Figma’s turnover that is relevant, but also the number of users. That is because Figma also offers a free version of its product, which is widely used. There are concerns that the acquisition will eliminate a major source of competition from the market. In addition, there is also a risk that, following the acquisition, Adobe will tie Figma’s product to the sale of its own products.

The digital economy is one of ACM’s key priorities, and ACM is therefore extra alert to anticompetitive concerns in digital markets. In the digital economy, ACM sees a trend of larger companies buying up smaller, often innovative companies. In that way, larger companies are able to manufacture and bring to market innovative products faster. However, there are also risks associated with such practices, as they can also eliminate future competition. Subsequently, it may be easier for large companies to drive up prices or reduce quality. It can also be harmful to innovation. As a result of such acquisitions, new developments that are spearheaded by these smaller companies will take place either later or not even at all. ACM finds it important that, with regard to the acquisition at hand, attention is paid to ensuring a well-functioning market for people and businesses, now and in the future.

Why will the European Commission investigate this case?

It is not mandatory to notify competition authorities of each and every merger or acquisition. Only if the merging companies meet certain turnover thresholds will they be required to notify regulators of their merger or acquisition plans before going through with them. In this particular case, the turnover thresholds of ACM as well as those of the European Commission have not been met. However, the notification thresholds have been met in Austria and Germany. The competition authorities in those countries have thus been notified of this planned acquisition. The Austrian authority subsequently decided to file a request with the European Commission to launch an investigation into this acquisition. The German authority has joined that request, as has ACM. As a result, the acquisition’s effects on the Dutch market will also be assessed.

This acquisition has also attracted attention from outside the EU.

*This is the original title of the press release. The title above has been amended in order to match the e-Competitions format. Individual authors are welcome to provide original independent commentaries on the case law. Articles are subject to approval by the Board of e-Competitions Bulletin before publication based on the Editorial Policy (click here).

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Dutch Competition Authority, The EU Commission receives a merger referral from the Dutch Competition Authority concerning a proposed acquisition of a web-based interactive product designer by a rival (Figma / Adobe), 17 février 2023, e-Competitions February 2023, Art. N° 111056

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