Design fail: Adobe and Figma call off their merger as antitrust scrutiny intensifies
But surprisingly not from American regulators, but from EU regulators. I also sometimes hear similar stories about Asia with Chinese regulators and so on and so forth. Why are mergers between American companies subject to the whims of foreign bureaucrats?
When American companies do business on a multi-national basis, they have to comply with the business regulations in all of the countries where they do business. Anti-trust regulations are among those regulations. Anti-trust regulations are based upon day to day business activities of companies, unlike the internal corporate affairs of a company, which are only governed by the place of incorporation.
Companies like Adobe are multinational companies that do business in, and have large market shares in, many national markets. So, they are subject to the anti-trust regulations of the countries where they do business. Given that Adobe offered to pay $20 billion USD for Figma, it is safe to assume that it too is probably a pretty significant company, in terms of the relevant market shares, that does business in many countries, although it isn't as much of a household name.
The answer is that corporate mergers do not require the approval of foreign governments. If two American companies decide to merge, no other government can prevent it. But they can prevent the combined company from doing business in their country, and so merging companies will generally obey anti-trust rulings of countries that are significant markets for them, even though they don’t actually have to.
Multinational companies are usually not one giant monolithic company. Instead they usally comprise of multiple smaller companies that act and operate in each country/region. So while the head company is American and thus American regulators get a say, so do the other countries regulators get a say in what happens to their local company.
