Adobe slips as UK regulator says Figma deal may reduce competition (update)
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Adobe (NASDAQ:ADBE) shares slipped nearly 1% in pre-market trading on Friday after the U.K.'s antitrust regulator said the company's $20B deal to buy Figma could cause a "substantial lessening of competition."
In a statement, the Competition and Markets Authority said it found the deal "could mean less choice for designers of digital apps, websites and other products."
"The CMA found that Figma has established a substantial share of the market for screen design software and that Adobe has been continuously investing in and competing in this segment," the regulatory agency added. 
"The CMA found that competition between Figma and Adobe has driven investment in updating and developing screen design software, and this important rivalry could be lost if the deal goes ahead."
The CMA said Adobe (ADBE) and Figma have five working days to submit proposals to address the CMAâs concerns or the investigation will go to an in-depth phase 2 review.
In May, the CMA said it was probing the $20B deal to acquire Figma and had established a June 30 as the deadline for the first phase of its decision on the deal.
In a statement, an Adobe spokesperson told Seeking Alpha that the combination will deliver "significant value to customers" and it remains confident in the deal. 
"We remain confident in the merits of the case as Figmaâs product design is an adjacency to Adobeâs core creative products and Adobe has no meaningful plans to compete in the product design space," the spokesperson added. "We look forward to establishing these facts in the next phase of the process and successfully completing the transaction."
Earlier this month, it was reported that Adobe's (ADBE) deal to buy Figma could face an in-depth review by European antitrust regulators.
Adobe (ADBE) announced its deal to acquire Figma, which develops collaborative design platform software, in September 2022.
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Updated to include comment from Adobe spokesperson.