The US Federal Trade Commission (FTC) is suing Tapestry, the parent company of Coach and Kate Spade, in an attempt to halt its acquisition of Capri, the owner of Michael Kors, Versace, and Jimmy Choo. The FTC alleges that the deal would eliminate direct competition in the luxury handbag market, resulting in higher prices and reduced innovation for consumers.
The $8.5 billion USD deal was announced in August 2023. Tapestry, which also owns Stuart Weitzman, brings in upwards of $12 billion USD annually, while Capri has an annual revenue of around $4 billion USD. The companies had already received regulatory approval in the EU and Japan.
Following the deal, Tapestry would become the fourth-largest luxury fashion company in the world and would employ more than 30,000 workers globally. It would also allow Tapestry to have a bigger presence in the European market, which is largely dominated by LVMH.
In a statement, the FTC said that the “proposed merger threatens to deprive millions of American consumers of the benefits of Tapestry and Capri’s head-to-head competition, which includes competition on price, discounts and promotions, innovation, design, marketing and advertising.”
“Capri Holdings strongly disagrees with the FTC’s decision,” Capri said in its own statement. “The market realities, which the government’s challenge ignores, overwhelmingly demonstrate that this transaction will not limit, reduce, or constrain competition.”
Tapestry said that “there is no question that this is a pro-competitive, pro-consumer deal and that the FTC fundamentally misunderstands both the marketplace and the way in which consumers shop.”
