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DOJ to examine Adobe-Macromedia deal

Antitrust officials request information on both companies' Web authoring and vector graphics illustration products.

Federal antitrust regulators have requested additional information about Adobe Systems' proposed purchase of Macromedia, the companies said Monday.

The Justice Department apparently is taking a closer look at the competitive landscape for multimedia content tools. Specifically, officials have requested additional information on both companies' Web-authoring design and vector graphics illustration products, the companies said.

Adobe announced in April that it intended to buy Macromedia in an all-stock deal valued then at $3.4 billion. The company is seeking to expand the breadth of tools it offers and distribute multimedia content over a number of operating systems and devices.

The deal comes as Adobe, a market leader in electronic documents with its PDF software, is beginning to face greater competition from open-source players entering the market. And, of course, the multimedia tools designer is keeping a watchful eye on software giant Microsoft.

Despite regulators' request for additional information, Adobe still anticipates the deal will close this fall, the company stated.

Large mergers are often subject to close scrutiny by federal antitrust regulators, particularly if the companies involved serve the same markets.

"It's not unusual to see a second request (for information) in cases were the parties serve the same market, especially in software," said attorney Connie Robinson, who heads up the antitrust department at Kilpatrick Stockton. "Unlike a widget, where you can see it and touch it, software is harder to get your hands around and understand."

The request is considered a second request, because--as is standard among companies contemplating a merger--Adobe and Macromedia have already submitted preliminary information to the department.

Regulators are interested in reviewing what effects a merger would have on the industry's other players and on the the competitive landscape overall--and how changes would affect pricing, and hence, customers.

Even if Justice Department officials challenge a merger, as in the case of the Oracle-PeopleSoft deal, it does not necessarily kill the transaction. Companies sometimes prevail despite challenges from the government.