FTC sues to block $8.5 billion merger of Coach and Michael Kors owners
The Federal Trade Commission is suing to block Tapestry's $8.5 billion acquisition of Capri Holdings, saying the deal would harm consumers by reducing competition and raising prices in the affordable luxury sector.
Monday's federal court filing by the FTC challenges the proposed deal that would have one company controlling six fashion brands: Tapestry's Coach, Kate Spade and Stuart Weitzman and Capri's Michael Kors, Versace and Jimmy Choo.
The acquisition could have a negative impact on the millions of American shoppers who now benefit from the head-to-head rivalry between Tapestry and Capri, as well as on the roughly 33,000 workers employed by both companies worldwide, the FTC stated.
"With the goal to become a serial acquirer, Tapestry seeks to acquire Capri to further entrench its stronghold in the fashion industry," Henry Liu, director of the FTC's Bureau of Competition, stated. "This deal threatens to deprive consumers of the competition for affordable handbags, while hourly workers stand to lose the benefits of higher wages and more favorable workplace conditions."
Tapestry rejected the FTC's stance, saying the agency understands neither the marketplace nor how people shop.
"The bottom line is that Tapestry and Capri face competitive pressures from both lower- and higher-priced products. In bringing this case, the FTC has chosen to ignore the reality of today's dynamic and expanding $200 billion global luxury industry," the company said in a statement.
Tapestry said it would acquire Capri in August of 2023. The companies together generated more than $12 billion in sales in 2022.