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April 24, 2024 : The United States Federal Trade Commission (FTC) has filed a lawsuit to impede Tapestry Inc.’s proposed acquisition of Capri Holdings Limited. Tapestry, the parent company of Coach and Kate Spade, announced its intention to purchase Capri, which owns Michael Kors and Jimmy Choo, in August 2023. The deal, valued at approximately $8.5 billion, would create a major fashion conglomerate within the United States.
However, the FTC argues that the merger would stifle competition within the “accessible luxury” handbag market, a term coined by Tapestry to describe high-quality leather handbags offered at a relatively affordable price point. The Commission contends that both Tapestry and Capri are leading competitors in this segment, and their combination would eliminate the direct head-to-head competition that benefits consumers.
The lawsuit alleges that the merger would reduce consumer choice, potentially resulting in higher prices, fewer discounts and promotions, and diminished innovation in design, marketing, and advertising. The FTC emphasizes the importance of a competitive marketplace to ensure that consumers receive the best possible value for their money.
Tapestry has strongly opposed the FTC’s lawsuit, maintaining that the acquisition would create a more robust and diversified company. The company argues that the merger would not significantly impact competition within the accessible luxury market, as other brands continue to operate in this space. Tapestry also maintains that the deal would create new opportunities for innovation and growth.
A court date has yet to be set, and the lawsuit’s outcome remains uncertain. However, the FTC’s intervention highlights the agency’s ongoing efforts to ensure fair competition within the US marketplace and prevent mergers that could harm consumers. The legal battle will be closely watched by the fashion industry and antitrust experts alike, as the decision could have broader implications for future mergers within the retail sector.
