Adobe and Figma have announced they are mutually terminating their merger agreement, which would have seen Adobe acquire Figma’s platform for $20 billion (£16 billion).

In a statement, the computer software company said both companies still believe in the merits of the deal but have “mutually agreed to terminate the transaction” as there is “no clear path” to getting approval from the UK’s Competition and Markets Authority (CMA) and the European Commission.

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As a result, Adobe has to pay Figma a reverse termination fee of $1 billion (£800 million) in cash.

The news comes as the CMA recently found that the proposed acquisition of Figma, could harm competition in the digital design sector, resulting in fewer choices for designers of digital apps, websites and other products.

Adobe CEO and Chair, Shantanu Narayen, said: “Adobe and Figma strongly disagree with the recent regulatory findings, but we believe it is in our respective best interests to move forward independently.

“While Adobe and Figma shared a vision to jointly redefine the future of creativity and productivity, we continue to be well positioned to capitalise on our massive market opportunity and mission to change the world through personalised digital experiences.”

Figma CEO and Co-Founder Dylan Field added: “Going through this process with Shantanu, David and the Adobe team has only reinforced my belief in the merits of this deal, but it’s become increasingly clear over the past few months that regulators don’t see things the same way.

“While we’re disappointed in the outcome, I am deeply grateful to everyone who has contributed to this effort and excited to find other ways to innovate on behalf of our respective communities with Adobe.”