The UK’s Competition and Markets Authority (CMA) has said that Adobe’s proposed $20 billion takeover of cloud-based design tool maker Figma could harm competition in the UK’s digital design sector.

In a statement on Tuesday, the watchdog warned that the deal would remove Figma as a threat to Adobe’s XD product, and that it would likely harm innovation for software used by the vast majority of UK digital designers.

The UK’s digital design sector, the CMA said, is worth nearly £60 billion pounds to the UK, representing 2.7 per cent of the national economy. The sector employs over 850,000 people in highly skilled work.

The CMA launched an in-depth probe into the merger in July after Adobe refused to offer concessions over initial concerns.

The probe found that around 80 per cent of the UK’s professional product design market uses Figma, and that “without the merger, Figma would continue to take steps to develop or expand products that threatened Adobe’s position in image editing and illustration.”

In a damning ruling, the CMA said that the deal will “eliminate competition between these two key competitors” in the product design, image editing, and illustration markets.

Margot Daly, chair of the independent group conducting the investigation, said: “Adobe and Figma are two of the world leading providers of software for app and web designers and our investigation so far has found that they are close competitors.

“This proposed deal, therefore, has the potential to impact the UK’s digital design industry by reducing choice, innovation and the development of new competitive products.”

While stating that the deal would harm competition, the CMA said that it was open to consult with interested parties on its provisional findings before making a final decision on the merger.

In a brief statement, Adobe said: "We are reviewing the provisional findings and will re-engage with the CMA on the facts and merits of the case.”

The CMA has emerged as something of a kingmaker in an increasingly busy tech merger and acquisition market. The regulator extracted key concessions from Microsoft over its $69.7 billion takeover of game publisher Activision Blizzard, and cleared Broadcom’s $69 billion purchase of VMware in August following an in-depth Phase 2 investigation.

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