The Federal Trade Commission (FTC) has taken legal action to block Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings, the luxury fashion group that owns iconic brands like Versace, Jimmy Choo, and Michael Kors. The FTC’s administrative complaint and federal court lawsuit aim to prevent the creation of what would be the first major U.S.-based fashion conglomerate.
First announced in August, the proposed merger would combine Tapestry’s portfolio, which includes Coach, Stuart Weitzman, and Kate Spade, with Capri’s renowned brands. The FTC argues that this consolidation would eliminate competition, particularly in the ‘accessible luxury’ handbag market, where brands like Coach and Kate Spade directly compete with Michael Kors and Jimmy Choo.
Henry Liu, director of the FTC’s Bureau of Competition, expressed concerns about the deal’s potential impact on consumers and workers, stating, “This deal threatens to deprive consumers of competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions.”
In response to the FTC’s action, both Tapestry and Capri Holdings have vowed to fight the decision in court. Tapestry Inc. defended the acquisition as pro-competitive and pro-consumer, highlighting their strong legal arguments in defense of the transaction.
Capri Holdings also emphasized the competitive nature of the global luxury industry, stating, “Consumers have hundreds of handbag choices at every price point across all channels, and barriers to entry are low.” The company intends to vigorously defend the case alongside Tapestry to complete the pending acquisition.
Despite the FTC’s move, the deal has already received regulatory approval in the European Union and Japan, making the U.S. the final jurisdiction needed to sign off. The FTC’s aggressive stance reflects its ongoing efforts to block deals perceived as anti-competitive, a rare move in the fashion industry where competition among brands is abundant.
